- Property administration appointments down nearly 40%
The latest statistics on administration appointments, issued by the Insolvency Service today, reveal that in the first quarter of 2013 appointments are down 28% on the previous year. Retail administration appointments are hugely down - by 47% - and appointments in the property sector have also reduced by 38%, compared with Q1 2012.
Richard Fleming, UK Head of Restructuring at KPMG, commented: “While there were a handful of high profile retail administration appointments in the traditional annual crunch point of January this year, the volumes tell a different story. The retail sector was at the vanguard of the economic downturn post Lehman, seeing a massive increase in failures in the beginning of 2009 and we saw another wave of pain in the first quarter of last year.
“Retail sales figures are slowly recovering but what we are seeing overall is better working capital management and some retailers are undoubtedly benefitting from the demise of those who have fallen in the last two years. Today’s numbers may well suggest that we have reached the bottom of the market, setting the agenda for a gradual return to growth, but market fundamentals such as the shift away from large property portfolios to internet sales mean that many companies, while not on the brink of failure, may well be operating under ‘zombie’ conditions, unable to access the finance they need to right size their business models and make the necessary investments in systems needed for the new multichannel trading environment. If zombie companies are unable to resolve their financial or operational model issues, their gradual decline could well necessitate an insolvency mechanism, such as a ‘pre-pack’ or a company voluntary arrangement.”
Commenting on the 38% drop in property administration appointments, Fleming added: “The statistics also show that the level of property administrations echoes the substantial drop in the retail sector. The retail and property sectors’ woes have been inextricably linked as the economy has faltered and this theme is likely to continue to play out as retailers seek to change their store portfolio requirements.”
Notes to editor
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