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Insolvency figures remain sky high

THE rate of acquisitions of insolvent businesses in the North East doubled between 2008 and 2009 and remains at the highest levels in recent years, according to new research.

During 2009, one in six of all North East deals involved acquisitions of distressed businesses, compared to one in 12 during the previous year, according to the study by Experian Corpfin on behalf of insolvency trade body R3.

And in the final quarter of last year, one in five deals completed in the region involved companies acquired out of administration or other formal insolvency procedures. This compares with a national average of just over 10%.

Linda Farish, chairman of the north east arm of R3 and director of Recovery & Insolvency at Newcastle-based accountants RMT, says: “The increase in the North East % of insolvency sales may be accounted for by the way deals are reported to Experian Corpfin. While pre-pack administrations may account for some of these deals, others will be acquisitions by astute buyers taking the opportunity to pick up bargains while values are low.

“These statistics represent businesses being given a second chance of survival, and help to sustain employment opportunities which would otherwise simply disappear.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .