BEG Begbies Traynor Group Plc

By Joe Hoppe

Begbies Traynor Group PLC said Friday that its third-quarter survey monitoring the financial health of U.K. businesses found the number of companies in significant distress shrunk, but critically-distressed companies grew.

The London-listed, corporate-restructuring specialist said it has noted the number of county court judgments against companies rose to 21,769 in the third quarter from 9,101 in the same period a year prior, as businesses resort to using the courts to recover debts.

County court judgments are often used as a bellwether for future insolvency, and the latest figures show court activity is picking up as creditors become more aggressive in chasing debts, Begbies said.

Significantly-distressed companies are those with a county court judgment of less than 5,000 pounds ($6,897) filed against them or those that have been identified by Begbies's credit risk scoring system, while critically-distressed businesses are those with judgments of more than GBP5,000 against them.

There has been a 14% fall in the number of U.K. businesses in significant financial distress in the last quarter, declining to 562,550, Begbies Traynor said. This is likely due to rising corporate revenue from pent-up customer demand, though there is no certainty such business patterns will continue, Begbies said.

There has been a 17% increase in critically-distressed businesses in the last quarter, rising to 1,668 in the third quarter from 1,431 in the second quarter.

"The fall in significant financial distress is welcome news and provides some breathing space for hard-hit businesses, however I remain concerned that trading conditions will deteriorate for many companies as supply-chain issues affect output and input costs continue their upward trajectory," Executive Chairman Ric Traynor said.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

October 29, 2021 04:29 ET (08:29 GMT)

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