Wilkes insolvency expert advises caution over increased business rescues
Recent figures show that the Midlands has the highest total number of business rescues in the UK outside London and North of England but as Wilkes Business Recovery Partner, David Cleary explains, it may not be cause for celebration just yet.
“This article only touches upon the real story. The result of surprisingly low insolvencies in the credit crunch and subsequent recession is the rise of the “zombie” company which is only surviving due to abnormally low interest rates, a reluctance by the banks to force companies into formal insolvency processes, the significant support given to business by the HMRC’s Time to Pay scheme and the flexible attitude for workforces who perhaps foresaw that some work was better than none.”
“Zombie companies, which in all other recessions in recent memory would have failed by this stage, have attracted the attention of even the Bank of England who’s analysts are wondering whether their continued existence is one factor explaining the stubbornly slow improvement in the UK’s productivity figures against its major competitors.”
“The message to Credit managers remains “be cautious” whilst to directors of struggling companies it is “take advice early as delay reduces options”.