Irwin Mitchell’s Head Of Restructuring Highlights The Need For A Strong Christmas For The Sector
The Head of Irwin Mitchell’s Restructuring and Insolvency team has raised concern about the number of insolvency cases within the retail and leisure industries – predicting that the impact of challenging market conditions could see even higher numbers in the New Year.
The latest data from the Insolvency Service reveals a higher rate of UK insolvencies over the past 12 months, with the second and third quarters of this year experiencing 6,319 and 6,208 corporate failures.
The data reveals a substantial surge in insolvencies within the accommodation and food services industry, with a 48% increase in the 12 months leading up to Q3 2023. The wholesale and retail sectors have witnessed a 52% rise in insolvencies over the same period.
Andrew Walker, partner and Head of Irwin Mitchell’s Restructuring and Insolvency team, warns that the retail and leisure industries have suffered more than others, emphasising the crucial role of the upcoming Christmas period for many firms.
He said: "The retail, leisure, and hospitality industries have also faced unprecedented challenges over the past year, with factors such as high inflation and staffing issues contributing to a higher rate of collapse.
“If the Christmas season fails to deliver the expected results, we anticipate a significant rise in insolvency cases in the New Year.”
Pressures within consumer-facing industries such as leisure, hospitality, and retail have been the driving force behind the elevated insolvency rates. Higher interest rates, increased debt levels, and subdued demand resulting from the cost-of-living crisis have strained the finances of companies operating within these sectors.
Andrew adds: “While a moratorium on insolvency measures during the pandemic kept proceedings low, these temporary protections have now ended, leaving companies with weak balance sheets vulnerable to creditor actions."