Corporate insolvency: Retailing gloom just an illusion
Personal bankruptcy: ‘IVA boutiques’ peddle their wares

Lee Manning, Reorganisation Services Partner at Deloitte, responds to the DTI’s quarter two insolvency statistics, announced today:

Retailing: big brand insolvencies create a gloomy illusion
“While the retail insolvency figures are up 13% on last year, in absolute terms the retail outlook is stable.  Only 251 retailers out of a total population of over 200,000 retailers went bust: a relative drop in the ocean.  Whilst a few big name retail insolvencies in the past year, like Kookai and Morgan, suggest the picture is less than rosy, the reality is that retail has performed better than expected this year.  This represents a stark contrast with football league clubs where approximately 30% of those businesses have been in insolvency at some point in the last decade.  If we saw the same situation on the high street, it would be an economic disaster!”

Personal insolvencies: ‘IVA boutiques’ peddle their wares
“Another raft of personal insolvencies suggests that we are becoming a nation of bankrupts but it is important to remember that the Enterprise Act has made bankruptcy a much easier process with far less stigma attached.  Individual voluntary arrangements (IVAs), in particular, have had a huge impact on the volume.  IVAs are the acceptable face of personal insolvency.  The growth of IVA ‘boutiques’, that help people file an IVA, have also boosted figures.”

Interest rate increase: psychological effect rather than real financial pain
“The modest interest rate increase will not make a huge difference to the average householder’s bills.  The quarter percent increase will have the psychological effect of reminding people to consider their financial position without causing an immediate financial problem. Ultimately, it should have the desired impact of creating a soft landing in the housing market as first time buyers seeking mortgages, in particular, review the amount they want to spend on property purchases.”

Paper, print and publishing: technology evolution impacts
“The latest DTI figures show another jump in insolvencies in the paper and print sector, up 20% on the previous quarter and up almost 40% on the previous year.  The figures confirm an evolution from traditional print to electronic media and a more environmentally conscious use of packaging.  Technological advances are not restricted to the web and economies of scale have now changed in the printing industry whereby smaller print runs can now be ordered at a cheaper cost with shorter lead times.” 

Ends

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.  For further information, visit our website at www.deloitte.co.uk.

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.