Insolvency body R3 have released survey results detailing the concerns of the insolvency industry at the potential consequences of Brexit. Almost three quarters of those surveyed predicted that corporate failures will rise by the end of 2017 due to the referendum result.
The Association of Business Recovery Professionals, known by its brand name ‘R3’, is the leading professional association for insolvency specialists in the UK. R3 completed the survey of 364 members of the profession between 11th and 22nd November 2016.
Andrew Tate, president of R3, says: “The insolvency and restructuring profession is concerned about the impact leaving the EU will have on the financial health of UK businesses. Even before leaving, the effects of ‘Brexit’ are being felt: a suddenly weaker pound and increased business uncertainty are already causing problems.”
Andy Platt, Director at Focus Insolvency Group, commented: “As we predicted in our blog post published on the day of the referendum result, this has been an uncertain time for many businesses. With Article 50 yet to be triggered, and what kind of Brexit we will be having still unknown, this uncertainty is likely to continue for a good while yet.”
The survey found that respondents thought a ‘hard’ Brexit would increase insolvency numbers more than a ‘soft’ Brexit would.
Andy Platt continued: “Uncertain economic times makes it all the more important for businesses to plan ahead, but at the same time makes that far trickier to do. We would strongly recommend that all businesses revise their cash-flow forecasts, or if they do not have one, they should make one as soon as possible.” You can read more about preparing a cash-flow forecast here.
Brexit as a reason for company failure
45% of R3’s survey respondents said Brexit has been mentioned by businesses seeking help since June.
Andy Platt, Focus Insolvency Group
Lowcostholidays, which was placed into administration in July, blamed Brexit uncertainty as one of the reasons for the company’s financial difficulties. Jamie Oliver recently announced the closure of six of his restaurants, partially blaming Brexit for their demise.
Andy Platt said: “Focus Insolvency has seen an increase in businesses seeking advice since June. During our initial meetings with clients, Brexit is frequently being mentioned. I’ve noticed that businesses from the South of England seem to be the most likely to mention Brexit to me as a factor.
Whilst some businesses are obviously feeling the pinch due to Brexit, what we don’t want to see is Directors using Brexit purely as an excuse to mask any lack of action on their part. We want to see businesses being proactive, planning ahead, facing any difficulties they may have head on and seeking advice if it is needed”.
Can we help?
If you have a client who is experiencing financial difficulties, or if you would like to discuss anything that has caught your eye in this blog post, please get in touch! Focus Insolvency Group specialise in recovery solutions and are keen to help individuals and businesses get back on their feet. We can help with debt consolidation, preventing bailiff action, allowing individuals to make a fresh start and companies to continue to trade.