- Retail sees largest fall with administrations down 31%
- Only real estate bucks downward trend with 8% increase in administrations and 25% increase in CVAs
The latest statistics from the Insolvency Service have shown a meaningful drop of 11% in the number of administrations for the second quarter of 2011, compared with the first quarter of the year (from 782 to 695). Moreover, administration levels are now some 65% down on the peak of over 2,000 seen in the fourth quarter of 2008.
David Costley-Wood, restructuring partner at KPMG, commented: “In the midst of stock market crashes, the Eurozone crisis and all manner of corporate meltdown stories, today’s administrations statistics will come as a surprise to many. It is perhaps an important reminder that companies are not experiencing the same levels of volatility seen in the immediate aftermath of the collapse of Lehman Brothers.
“Real estate is the only sector to have seen a significant increase in administration appointments (up 8% on the previous quarter) and a more substantial increase in company voluntary arrangements (up 25% on the previous quarter). Real estate now makes up the highest proportion of administrations at 35% of the total volume, highlighting the fundamental issues within the property industry. Inappropriate business models could, in our view, take as long as a decade to resolve but - at the very least - the severity of distress has eased off: property administrations made up over half of all administrations in Q4 2008.”
Key stats:
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Real estate is the largest sector affected by insolvency, making up 35% of total administration numbers (administrations are up 8% in Q2 from Q1);
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However, real estate made up over 50% of administrations in the peak of Q4 2011;
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The real estate sector saw a 25% increase in CVAs (Q2 compared with Q1) and now makes up 30% of total CVAs;
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Retail and hotels & restaurants both saw decreases of 31% in administration appointments (NB hotels & restaurants account for a much smaller volume);
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Overall CVA numbers are broadly flat in 2011 with 187 recorded in Q2 compared with 183 in Q1.
Commenting on the substantial drop in retail insolvency, Costley-Wood went on to say:
“Traditionally the first quarter administration volumes for retail are high as many companies fail just before the first rent quarter date of 31st March. Of course, such a distinct drop in numbers in the second quarter of the year is a surprising but welcome reprieve from the rash of insolvencies we saw at the beginning of the year. Unfortunately our experience of the past two months suggests that the third quarter statistics (available in November) may be more disheartening for the retail sector.”
Ends
Notes to editor
For further information please contact:
Sorrelle Cooper, Senior PR Manager: 020 7694 8527 / 07932 078218
sorrelle.cooper@kpmg.co.uk
KPMG Press Office: 020 7694 8773
About the Insolvency Service statistics
The Insolvency Service publishes corporate and personal insolvency statistics each quarter. For further information, please visit:
http://www.insolvencydirect.bis.gov.uk/otherinformation/statistics/201108/index.htm
About KPMG:
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
