Mark Firmin, restructuring partner at KPMG, commented: “The sharp increase in administration appointments for the last quarter of 2013 will come as a surprise to many, running counter to the increasingly numerous positive economic indicators."
The latest statistics from the Insolvency Service for Q4 2013 have shown administration appointments rise by 18 percent (from 544 in Q3 2013 to 642 in Q4 2013), with the real estate sector seeing appointments increase by 57 percent (from 141 in Q3 2013 to 222 in Q4 2013). The hotel and restaurant sector also saw an increase of 50 percent in administration appointments (from 23 in Q3 2013 to 48 in Q4 2013).
Mark Firmin, restructuring partner at KPMG, commented: “The sharp increase in administration appointments for the last quarter of 2013 will come as a surprise to many, running counter to the increasingly numerous positive economic indicators. It is perhaps even more surprising that the property sector, which is purportedly enjoying another boom, saw such a marked increase in administration appointments at the end of the year.
“The numbers should not necessarily set the hares running as history has taught us that many businesses, perhaps counter-intuitively, struggle to survive when economies pick up again as over-trading tips them over the edge. However, the numbers do represent a cautionary warning that we should not herald a full recovery just yet. It is certainly true that pockets of the South East are seeing huge increases in property values but this is not the story of the UK property market overall.
“While the volume of administration appointments in the hotel and leisure sector is a fraction of the number of overall appointments in the property sector, the large increase shows that this sector is still struggling to put down the roots of recovery.”
The overall insolvency statistics, including liquidations (which typically affects smaller companies and is a wind up procedure on larger companies) and receiverships were down 7 percent. The level of administration appointments is the barometer used by restructuring professionals to measure the level of insolvency activity in England and Wales.
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.