9% surge of Merseyside firms in financial distress

Wed, July 29th, 2020

More than 7,000 businesses on Merseyside are operating under significant...

  • 9% surge of firms in financial turmoil says new report by Begbies Traynor.
  • Backlog of court cases indicate further pain ahead.
  • Key sectors see double-digit increases in distress despite Government support.

More than 7,000 businesses on Merseyside are operating under significant financial distress, according to new data released today by Begbies Traynor.

The latest Red Flag Alert data for Q2 2020 has recorded a 9% year-on-year increase in the number of distressed firms in the Merseyside region. Since the beginning of the pandemic in the UK – an additional 512 have fallen into distress bringing the total to 7,413.

Experts at Begbies Traynor in Liverpool say the rise could have been much higher, were it not for reduced court activity due to the coronavirus pandemic which has substantially reduced the number of CCJs and other legal action being taken against indebted companies.

Key sectors of the regional economy have seen double-digit increases in distress over the past 12 months.

Food & Beverages has seen a 15% year-on-year increase (up from 88 firms to 101), the Leisure & Cultural sector has seen an 14% increase (from 169 to 192) and Real Estate & Property a 21% increase (from 788 to 952).

The shuttering of bars & restaurants has contributed to a 9% increase in distress in the sector with 353 (up from 324) teetering on the brink across the region.

Keith Tully, partner at Begbies Traynor in Liverpool, said:

“These figures are alarming but the real pain is likely to begin when the Government furlough scheme is withdrawn, bounce-back loans are spent and the courts re-open for enforcement action.

“This crisis will force many companies out of business. The reality is that many businesses across our region are unviable due to high levels of debt and poor sales. Company directors must take swift action if they’ve exhausted their Government support options and levels of business continue to decline over the coming weeks.

“On a positive note, we have already seen many businesses restructure their operations and finances and we expect to see more in the months ahead. Crisis always creates opportunity and businesses will have to be creative and bold to make changes in order to thrive in the post-Covid climate.

"Entrepreneurs who are able to refinance, adapt their business and create new opportunities to deliver sales in this climate will flourish.”

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