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With the ever growing uncertainty surrounding Brexit; consumer and business confidence has plummeted. At the end of 2018, on-line retail giant ASOS reported a profit warning over a decline in sales due to a poor November performance, causing its stock price to initially fall by 40%. HMV, House of Fraser and Patisserie Valerie have all been placed into Administration; the two former stores have since been rescued, with the Administrators continuing their attempts to sell the latter. Extensive commentary has been made in recent months in respect of Debenhams and its fate, possibly a Company Voluntary Arrangement? The one thing that all these stores had in common was their assumed safe position as high street and on-line favourites for shoppers, and their financial woes came as a surprise to many.
Earlier this week, the Office for National Statistics announced that growth in the UK for the year ending 2018 was at its slowest rate in 6 years, down to 1.4% from 1.8% in 2017. As reported in the BBC, the ONS believe that “falls in factory output and car production” were mainly to blame for the low growth.
Statistics recently published by the Insolvency Service (IS) in England & Wales (which also provides statistics on Northern Ireland insolvencies) shows that during 2018 in E & W the number of personal and corporate insolvencies increased to their highest levels since 2011 and 2014 respectively. The IS attribute the increase in personal insolvencies to the sharp increase in individuals entering Individual Voluntary Arrangements (IVAs). Creditor Voluntary Liquidations (CVLs) appear to have been the most popular form of corporate insolvency. In NI, for Q4 in 2018, individual insolvencies were down by 3.9% compared against the same quarter in 2017. It is generally accepted that the gradual reduction in personal insolvencies is in large caused by the knock on effect of the bankruptcy petition level increasing from £750 to £5000 from the end of November 2016. In line with the trend in E&W, IVAs in NI were on the increase last year, as well as Debt Relief Orders. CVLs also appeared to be on the rise slightly for Q4 2018 compared to the same period in 2017.
It appears therefore that over the past year many individuals, companies and creditors have availed of the various insolvency options provided for under the insolvency legislation, whether voluntarily or otherwise in both NI and E&W.
Whilst Philip Hammond doesn’t think the country is going to experience another recession, the concerns over Brexit, coupled with other global economic concerns, cannot be doing much to inspire consumer and business spending. The reality of Brexit is that no one knows exactly how it is all going to play out. The insolvency sector waits with anticipation to see what the next quarter and indeed the next year will bring once already increasing insolvency figures collide with the impact of Brexit.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. If you or your company have any queries, please contact our Insolvency & Business Restructuring at Cleaver Fulton Rankin for further advice or information.
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