Company insolvency actions among North East companies rose dramatically last month.
A new report from insolvency and restructuring trade body R3 found a 48% increase in liquidator appointments, administrator appointments and creditors’ meetings in February, compared with the previous month. The level is almost the highest it has been in a year, the authors say.
There were 87 insolvency activities during the month - a marked change on the roughly 60 that have taken place through each of the last six months. The data, which comes from Creditsafe, includes high profile collapses of construction firms Tolent and Metnor, and ethical products specialist Traidcraft.
Read more: Administrators appointed to Metnor Group following collapse of subsidiaries
It is the highest level in the region since the removal of temporary insolvency protections at the start of April 2022, which were designed to protect businesses in financial distress from creditor actions during the pandemic. The number is also 20% higher than the 74 insolvency-related activities in February last year.
North East chair of R3 Chris Ferguson, who is also head of recovery and insolvency at Gosforth-based RMT Accountants & Business Advisors, said: "The first quarter of any year is traditionally the hardest for businesses in many industry sectors, including retail, leisure and hospitality, and the headlines were sadly full of bad news for some well-known North East names last month.
“There is often a knock-on effect for smaller firms in the supply chain where larger businesses fail, and while it has been good to see many of the SMEs impacted by the insolvency of key clients being able to pick up work elsewhere, there will undoubtedly be others that haven’t been able to do so.
“It’s encouraging to see the number of North East start-ups remaining robust in the face of continuing economic challenges, but the enduring regional situation around late payment of invoices remains a concern, especially as the impact this has on supplier cash flow, which can sometimes be the final straw for struggling businesses."
R3's research also found that regional firms were waiting for payments on nearly 162,000 invoices that had gone past payment deadlines. 12,700 regional firms had invoices outstanding that should already have been settled.
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