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UK firms owe £55bn to creditors

Published on 30 Apr 2010 under category: legal

UK firms most at risk from insolvency currently own more than £55 billion between them to creditors and suppliers, a new report has claimed.

Begbies Traynor found this week in its latest Red Flag Alert that over 160,000 businesses are saying they are still only holding their heads above water as a result of the recession.

Despite improving economic conditions, the number of firms that reported serious cashflow problems rose by 14 per cent from 20,074 to 161,601 in the first quarter of 2010.

According to the consultancy, half (seven per cent) of the increase may be down from creditors taking more legal action to get their money back.

Ric Traynor, executive chairman of the group, said: "This shift in behaviour [from creditors] heralds a new phase in the cycle, putting businesses experiencing financial problems at greater risk of failure."

He added that increasing interest rates are likely to have further repercussions on businesses later this year and into 2011.

If you require advice on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett.