Company failures could surpass 2009 peak, experts warn

Begbies Traynor executive chairman Ric Traynor said the number of company failures could exceed the last peak in 2009, with businesses now in a marketplace where interest rates are rising – something that wasn’t the case back then – making it more expensive for struggling companies to survive the recession. 

He also explained how the biggest problems would occur for the “usual suspects” of companies in industries serving the British consumer, with spending expected to fall sharply next year.  

FRP Advisory chief Geoff Rowley, meanwhile, said much of the pressure on companies was coming from their investors that showed no signs of breaking after years of investment.  

Both Traynor and Rowley predicted the insolvencies would be worsened by the unwinding of pandemic support provided by the government. Traynor explained: “It’s been well spent and we are now finding out who can repay and who can’t.”  

This came off the back of the businesses reporting their results for the first six months of the 2022/23 financial year – with revenues up for both. Begbies Traynor saw revenues increase from £52.3m to £58.5m, while FRP Advisory’s went from £44.7m to £49.4m.  

Rowley said his firm’s restructuring team is “well positioned” to service the expected increase in demand. He added: “Uncertainties persist over how long the available liquidity and government backed loans can sustain troubled businesses and how proactive key creditors like HMRC and institutional lenders will be on addressing over-due debts.” 

As for Traynor, he expects to see continued growth from business recovery and financial advisory, given its increased order book, higher level of enquiries and increasing economic headwinds.  

He added: “We are also confident in the prospects for property advisory and transactional services, reflecting its resilient income streams, continuing flow of new instructions and potential to continue developing its mix of services. Overall, we remain confident of delivering upon expectations for the full year.”