We understand the environment you operate in and the unique challenges you face.
Fewer Businesses Report Signs of Distress
New research by insolvency and restructuring trade body R3 has revealed a fall in the number of so-called ‘zombie’ businesses in the UK, and also in the number of companies reporting signs of distress.
One of the signs that a company is a ‘zombie’ business is that it is only paying the interest on its debts, and the number of companies in this position apparently dropped to 3% in December from 5% in April this year.
R3’s December research also saw other signs of business distress fall back from a recent upward trend, with 16% of UK businesses reporting at least one of five problems (decreased profits, reduction in sales volumes, regular use of maximum overdraft, recent fall in market share, making redundancies).
In September 2017, 25% of businesses had reported one of these signs of distress, up from 20% in April 2017 and 21% in September 2016.
However, the research also found that levels of business growth remain flat and well below record highs. Around 55% of UK businesses report at least one sign of growth (increased sales volumes, increased profits, investing in new equipment, market share growth, business expansion) compared to the high of 69% seen in December 2015 and June 2016.
Businesses’ economic pessimism is apparently also continuing to rise, with 27% of businesses now more pessimistic than they were three months ago – the highest this figure has been March 2013. Around 40% of businesses are more optimistic than three months ago, but this is the lowest this figure has been since March 2013.
For expert legal advice on these issues, and other areas of corporate and commercial law, then contact our specialist commercial lawyers today.