Over half a million British companies in financial need
Following the outbreak of the corona virus, the number of British companies in financial need has exceeded half a million.
Distressed companies rose 3% to 506,946 in the first quarter of this year Begbies Traynor, produced for The times.
Begbies Traynor said it has increased 45% since the beginning of 2014 when the company started producing comparable statistics. If only 5% of these companies went bankrupt, that would mean another 25,000 bankrupt companies. This contrasts with a total number of corporate bankruptcies in the past year of 17,196 National Statistics Office (ONS).
The COVID 19 outbreak has forced governments to take strict measures Restrictions that have affected global stock markets, companies, and employees and could lead to a global financial crisis.
Begbies Traynor found real estate and real estate to be the most vulnerable, with non-performing companies growing 1% year over year. Sports and health clubs with 7%; Hotels and accommodation increased by 6%; and food and beverage by 7%.
Following the UK government's decision to close cafes, pubs, clubs and restaurants on Friday, the leisure, retail and travel sectors were also exposed to the COVID-19 outbreak.
Begbies Traynor defines distressed companies as those with minor court judgments of less than £ 5,000 filed against them, or those identified by Begbies' proprietary credit risk assessment system, that "reviews companies for a sustained or significant deterioration in key financials and." Indicators, including those used to measure working capital, contingent liabilities, retained earnings and net assets. "
Julie Palmer, partner at Begbies Traynor, There were 500,000 non-performing companies before coronavirus affected the economy, which is about 14% of UK companies.
She expected the number of companies in need to increase drastically in the third quarter of the year. She added, "It's a bit of a war. When you are at war, people come together and try to help. If you emerge from this war, it is dangerous for businesses."
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