Why is number of administrations for West companies falling?

Economy & Politics | Funding | South West

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The number of companies going into administration fell to historic lows during 2020, as the array of government COVID-19 support measures continue to provide a lifeline for those businesses who have been adversely affected by the pandemic.

Analysis of notices in The Gazette by KPMG’s Restructuring practice showed that 109 companies went into administration in the South West* in 2020, compared to 149 in 2019; a drop of 26.8%.

Nationally 1,112 companies went into administration over the course of 2020 – this is the lowest annual total since KPMG started tracking the data in 2005, and a fall of 22% on 2019, which saw 1,425 administrations.

In the South West, manufacturing (14), construction and building development (12), and retail (7) accounted for the lions’ share of insolvencies.

Sarah Collins, Restructuring Lead for KPMG in Bristol, comments: “Comfort can be taken from the fact that fewer businesses than expected have been forced into insolvency during the crisis, as the breadth and depth of support measures available, coupled with a supportive lending community, have given organisations that vital lifeline.

“We also know that there are a number of sectors, including the likes of tech, online retail and financial services, which have seen something of a COVID-bounce.

“We need to be clear, however, that these figures provide a distorted view of reality. Those businesses that remain in hibernation due to ongoing lockdown measures, such as those in the leisure and hospitality and travel and tourism sectors, continue to accrue liabilities while seeing precious little cash flow into the business. At some point, rent and tax deferrals and loans will need to be repaid. The Job Retention Scheme will unwind. Weaning off these support schemes is going to be a massive challenge for many.”

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