FRP: Administrations below pre-pandemic levels despite mounting headwinds

Business advisory firm FRP Advisory has noted that administrations remain below pre-COVID-19 levels, despite the mounting pressures faced by UK businesses. In a six-month trading update, the firm said that government-backed support measures meant that many troubled firms had so far avoided the need to implement formal restructuring processes.

FRP noted that there has been continued growth in the higher volume liquidations market, including Creditors Voluntary Liquidations (CVLs), with many owners actively choosing to close their companies due to headwinds including rising costs, mounting debts and weakening consumer confidence.

There has also been a growing number of Compulsory Liquidations, as creditors seek to reclaim debts from companies following the lifting of pandemic-related restrictions on creditor action.

In its report, FRP said that administrations remained below pre-pandemic levels, despite a litany of issues facing businesses, such as interest rate increases, rising input costs, supply chain disruption, the withdrawal of pandemic support and the ongoing effects of Brexit.

The company added that creditors, including HMRC, have long backlogs of arrears to address, which is likely to have brought some respite to companies with large debt piles, while it stated that institutional lenders “continue to be supportive where possible”.

However, given the headwinds facing UK companies and the wider economy, FRP also noted that demand for its restructuring services will continue to increase.

In the report, FRP CEO Geoff Rowley stated: "Our Restructuring team is well positioned to service the expected increase in demand stemming from the many challenges faced by UK businesses, although uncertainties persist over how long the available liquidity and government backed loans can sustain troubled businesses or how proactive key creditors like HMRC and institutional lenders will be on addressing over-due debts.”

FRP added that, while mainstream M&A activity is likely to reduce compared to H2 2021, there should be an increase in restructuring-related dealmaking activity, as well as debt refinancings.


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