Surge in Mersey property and construction firms facing ‘significant financial distress’

Out of the 6,821 Merseyside businesses facing distress, 1,786 are in the property and construction sectors, according to the latest Red Flag Alert from Begbies Traynor. Tony McDonough reports

worker, building, construction
Hundred of Merseyside property and construction firms are facing ‘significant financial distress’, says Begbies

 

Almost 7,000 businesses across Merseyside are facing “significant financial distress”, according to the latest Red Flag Alert report from insolvency specialist Begbies Traynor.

And the the study says the city region’s property sector is among the hardest hit with 795 out of the total of 6,821 businesses, facing significant financial distress at the end of the first quarter of 2019.

This is up from 764 in the previous quarter and comes despite a number of major construction projects across Merseyside going ahead. And it means there has been a 11% year-on-year increase in levels of distress in the property sector with nearly 79 more firms now facing significant financial distress compared to the same period last year.

In addition, Begbies reports almost nearly 1,000 construction companies in Merseyside are now suffering significant financial distress.

Jason Greenhalgh, partner at Begbies Traynor in Liverpool, said: “Property and construction businesses have started 2019 facing severe challenges. Despite visible evidence of new developments springing up across Merseyside we are seeing company directors facing a significant squeeze on their margins.

Jason Greenhalgh
Jason Greenhalgh, partner at Begbies Traynor in Liverpool

 

“This sector is a key barometer of the economy and these figures are a warning shot not just for those operating in the property sector but for all other sectors who all rely on a confident, and growth-orientated property sector.

“It will be interesting to see how the sector continues to ride out the ongoing political uncertainty surrounding Brexit, especially in light of the fact that Liverpool in particular has seen positive inward investment from all corners of the globe in recent years.

“Board directors must be proactive with taking action if they feel they fall into this large group of distressed firms. The sooner cashflow issues are addressed, the more likely it is that a more positive outcome can be achieved through restructuring or negotiating with creditors.”

The regular Red Flag Alert updates measure corporate distress signals, drawing on factual legal and financial data from a range of relevant sources. It defines firm with “significant’ problems” as those with minor CCJs (of less than £5,000) filed against them or which have been identified by Red Flag’s proprietary credit risk scoring system.

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