Insolvency risk hits 2017 highpoint among West Midlands companies, report warns

By Simon Penfold | Business | Published:

The risk of insolvency among companies in the West Midlands is rising as the year comes to an end, a new report warns.

R3 Midlands chairman Chris Radford: "In 2018, local companies will face what can only be described as a ‘perfect storm’ of potential challenges."

The number of firms in the region at an elevated risk of insolvency is now at its highest point so far this year, with significant increases across every key business sector.

Transport and technology companies are at the highest risk, according to the study from restructuring and insolvency trade body R3. But manufacturing and hotels are the two most resilient sectors.

The latest statistics from R3 show nearly one in three business in the region are in the elevated insolvency risk band – equivalent to around 87,800 companies.

This is an eight per cent rise on the figures at the start of the year, when 62,800 faced an elevated likelihood of insolvency.

The statistics are compiled using Bureau Van Dijk’s Fame database and of the key West Midlands business sectors monitored by R3 – which include manufacturing, retail, construction, tourism operators, pubs and hotels – technology & IT, and transport & haulage contain the highest percentage of struggling businesses.

Two in five of all businesses in these two sectors now carry an above average possibility of insolvency.

The sector proving to be more financially stable than the others is hotels. This is despite its insolvency risk increasing by 7.4 per cent on November’s figure – a 2017 high – and the number of hotels in the elevated risk band rising from 141 to 150, which is around one in four.

The West Midlands manufacturing sector has the region’s second lowest proportion of companies at greater than normal risk of financial failure, at around one in four . This equates to 4,700 local businesses in the negative risk band – a rise of 8.4 per cent on last month’s total.


R3 Midlands chairman Chris Radford, a partner at law firm Gateley in Birmingham, said: “It is encouraging to see conference tourism giving comparative stability to many West Midlands hotels, and the local manufacturing sector seizing available business opportunities.

“Overall, the R3 research does not provide the best of news on which to end the year. It does, however, give focus to the importance of monitoring company finances carefully and planning for every eventuality.

“In 2018, local companies will face what can only be described as a ‘perfect storm’ of potential challenges. Brexit, the National Living Wage, inflation, exchange rate fluctuations and increases in rent and rates are only a few of the possible factors which could trip up firms not prepared to face them.

“Key to business survival is to take relevant professional advice at the first sign of significant financial difficulties. When R3’s members are called in to help early enough, much can be done to rescue and support businesses beyond traditional insolvency solutions.”

Simon Penfold

By Simon Penfold
Business Editor - @SPenfold_star

Business Editor based at the Express & Star's head office in Wolverhampton, looking for stories big & small.


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