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Insolvencies set to rise as creditors go to the courts

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A sharp rise in creditors using court action to recover debts has fuelled fears of a jump in insolvencies.

The number of county court judgments lodged against companies in the three months to the end of September was 21,764, a rise of 51 per cent on the previous quarter.

Begbies Traynor, the restructuring firm, warned that the latest figure painted a “gloomy picture” for future insolvencies.

In the third quarter, 155 companies fell into administration or receivership, a 26 per cent rise on the previous quarter, according to Interpath Advisory, another restructuring firm. The construction and energy sectors suffered the biggest rises in receiverships, as global supply chain challenges and rising inflation took their toll.

Begbies Traynor found that 562,550 companies faced county court judgments of less than £5,000 in the third quarter, down 14 per cent on the previous quarter.

The number of critically distressed businesses with county court judgments of more than £5,000 filed against them rose by 17 per cent to 1,668 over the same period.

Ric Traynor, executive chairman of Begbies Traynor, said he was “concerned that trading conditions will deteriorate for many companies as supply chain issues affect output and input costs continue their upward trajectory”.

Begbies Traynor has found there is a real concern among many directors of small and medium-sized companies about their ability to pay back government bounce back loans, which let them borrow a maximum of 25 per cent of their turnover up to £50,000.

Directors have reported that HM Revenue & Customs is “taking an increasingly aggressive line in chasing debts, particularly those who have defaulted on time-to-pay arrangements”.

Blair Nimmo, chief executive of Interpath, said that the sectors facing higher activity included general manufacturing, automotive and aerospace supply chains. “Against a backdrop of rising inflation costs and lessening government support, there are signs that the level of insolvencies are beginning to rise.”

He warned that the construction sector was “on the brink of a perfect storm . . . Raw material costs remain at high levels, with steel, timber and plastic products nearly 50 per cent higher than they were pre-April 2020.”





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Bloomberg names Green ME of finance for Americas

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Rick Green

Rick Green has been named managing editor for finance in the Americas at Bloomberg News, effective July 11.

He is currently senior editor for markets at Bloomberg.

Green was previously a team leader for distressed company news. He was also corporate finance editor and a senior editor on the U.S. finance team.

Before Bloomberg, Green was assistant managing editor for business and technology at Newsday. He also worked at BusinessWeek magazine as a senior editor and at SmartMoney magazine.

 





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Liberty Steel secures time with Greensill as debt rstructuring continues

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Liberty Steel Group has entered a standstill agreement with Greensill Bank.

It pauses all enforcement actions between the South Yorkshire headquartered business and the subsidiary of the collapsed financial institution as it focuses on recovery.

Greensill Bank, part of Greensill Capital, is Liberty’s largest creditor on the business’s debt facilities, provided in 2019.

Read more:£26m British Steel Special Profiles upgrade given the go-ahead

The agreement lasts until October 31, with potential to extend until the end of the year.

Liberty said it will enable the company to develop a longer term sustainable financing structure, with detailed due diligence and information exchange continuing between the two parties.

A Liberty spokesperson said: “Today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders.

“We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle. Our core businesses continue to perform well and are operationally strong despite some economic headwinds.”

HMRC had filed then withdrew a winding up petition for Liberty earlier this year as progress with creditors was made.



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At Close of Business: Jordan Murray talks an Australian republic

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Journalist Jordan Murray discusses revived debate over the possibility of an Australian republic.



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