The number of distressed businesses in the North East and Yorkshire has risen again this year, despite a broader decline in insolvency rates.
Research from the Institute for Turnaround (IFT) shows the number of companies in distress – those that cannot meet financial obligations – has risen by 10% in the North East and 12% in Yorkshire. The numbers come amid a wider upward trend showing levels of distressed businesses across the UK has risen by nearly 10% on average – a 60% increase since 2017.
Despite a decline in insolvency rates since 2023, the report’s authors say distress is still pervasive with nearly half of IFT members – including turnaround professionals, bankers and investors – suggesting there will be an increase in company failures. They cite key challenges as servicing high levels of debt, difficulties in accessing further funding and lack of working capital
The biggest challenges for distressed but viable companies, in the coming months, are said to include board capacity or fatigue (40%) and the depletion of working capital (37%). Members surveyed for the ‘Societal Impact’ report also said that cultural and psychological resistance to external advice were the main reasons for distressed businesses failing to to seek support at an early stage, followed by lack of awareness of the difficulties and understanding of the turnaround process.
Clare Boardman, Institute for Turnaround (IFT) board member and spokesperson for Yorkshire and the North East, and senior managing director at global advisory firm Teneo, said: “In Yorkshire and the North East, businesses are being stretched to their limits. For many of these companies, it’s not a question of whether they’ll feel the strain—it’s about how they respond to it. Yorkshire, in particular, has always been home to resourceful and entrepreneurial leaders, and this spirit is what will carry businesses through these difficult times.
“The key is to act early. Many of the companies we’ve supported this year were able to stabilise operations and even return to profitability by focusing on working capital, streamlining operations, or renegotiating with lenders. There is hope, but the sooner businesses seek help, the better their chances of survival.”
The North East and Yorkshire readings are set alongside the largest increases in corporate distress found in Wales and the Borders region, which saw a 17% jump, followed by the Isle of Man and South West England. Manufacturing remained the dominant sector in turnaround, followed by construction. The automotive sector has also risen in the rankings, with IFT citing regulatory pressures as the cause.
Milly Camley, CEO at The IFT, said: “Like other regions across the UK, businesses in Yorkshire and the North East are facing cumulative external factors that can weigh on even the most well-managed companies. Turnaround support such as that provided by IFT members and partners helps firms get ahead of some of these wider pressures to continue to support the North East’s vibrant and dynamic economy.”
Original artice – https://business-live.co.uk/all-about/yorkshire-humber
