Rising Number Of Construction Firms In Distress

Construction is the sector registering the most 'critical problems' with the number of firms admitting to being in financial distress, more than doubling from the same period last year, according to business rescue specialists, Begbies Traynor.

In the firm's 2008 first quarter Red Flag Alert Statistics, which monitors adverse actions, and other corporate distress signals, the number of construction firms facing problems stands at 565. In the same period last year the number was 201.


Construction tops of the list of sectors facing critical problems, followed by property services and then retail.

Ric Traynor, executive chairman of Begbies Traynor Group, said: "Clearly the credit crunch is beginning to bite and the decreasing availability of credit is being felt by the most fragile companies seeking to extend credit lines and/or refinance.

"The pressure is exacerbated by lenders having to tighten criteria still further and alter terms as they struggle to maintain margins.

"Our research would suggest that the construction, professional services, property and retail sectors are particularly feeling the pinch, and I would expect to see increasing numbers of companies facing insolvency in these sectors over the next twelve months."

(GK/NS)