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23 January 2012

More Companies hit ‘critical’

The number of companies in “critical” financial distress increased by 24 per cent year-on-year in final quarter of 2011, fuelling fears that the economy has hit rock bottom, according to data released by Begbies Traynor, an insolvency practitioner.

It’s Red Flag Alert found the situation worsened across almost every sector and region with the number of companies rising by 61 per cent in professional services, 56 per cent in travel and tourism, 30 per cent in telecoms an IT.

Companies in the south east and London are also starting to face severe financial issues, the report said.

It predicted further business distress in the coming months, as the UK moves into a deeper stage of the recessionary cycle and many “zombie” businesses, which are inherently insolvent but have managed to remain afloat with support from their creditors, eventually fail.

 

Source: Financial Times 21.01.2012

 

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*Article for guidance only. Professional advice should be obtained to ensure that all circumstances are assessed in providing a complete answer.