Firms struggling to stay afloat up by 20 per cent

THE number of UK companies struggling to stay solvent jumped 20 per cent in the last quarter of 2010, data shows today.

Nearly 148,000 companies had insolvent accounts, a court action against them or a wind-up petition filed by the end of 2010, up from 123,361 in the third quarter, the Red Flag Alert analysis by turnaround specialist Begbies Traynor found.

Companies in the “critical” stage of distress, which had been issued either county court judgments – lodged by creditors against insolvent companies – or wind-up petitions, owed creditors more than £52.7bn.

Companies reliant on government contracts were hit hardest, with more than 61,000 becoming seriously indebted in the quarter, 24 per cent more than in the third quarter.

The number of distressed companies was four per cent higher than in the last three months of 2009, when 141,527 firms faced financial difficulties at the height of the recession.

Begbies Traynor chairman Ric Traynor said the data showed companies “demonstrating real signs of distress.” “Trade creditors are losing patience with their debtors and in need of collecting cash,” he said.