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Wed October 28 2020

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Construction administrations fall 43%

13 Jul 10 The number of construction companies going into administration fell by 43% during the first six months of the year, compared to the same period in 2009, according to analysis by Deloitte, the business advisory firm.

The number of construction companies going into administration fell by 43% during the first six months of the year, compared to the same period in 2009, according to analysis by Deloitte, the business advisory firm.

There were 229 property and construction administrations during the half-year, a dramatic fall from the 399 reported in the first half of 2009, and 295 in the same period during 2008.

Administrations in the property and construction sector are also down 25% for the second quarter of 2010 compared to the first three months of the year.

Across all industry, the first six months of 2010 saw 1,065 administrations, down 43% on the same period last year and 25% less than the first half of 2006, the last full year before the financial downturn began, which saw 1,419 administrations.

Lee Manning, reorganisation services partner at Deloitte, said: “We are seeing a steady decline in administrations and this is certainly a positive sign that the climate is stabilising. I would be very surprised if administration levels increased dramatically this year; rather I would expect the second half to mirror the levels of activity we’ve seen in H1.

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“The summer months traditionally see lower levels of administration activity, particularly given the periodic absence of key decision makers taking summers holidays. We expect this decline to continue into Q3. Confidence has been on the rise, with consumer spending holding up better than expected, and corporate confidence being felt more widely.

“Whilst Deloitte’s latest CFO Survey revealed increasing fears of a double dip recession, these figures paint a more positive picture and may provide a corporate confidence boost. The proactive approach adopted by companies and lenders alike has had, and continues to have a positive effect in most distressed situations.

“By acting sooner, companies have, been able to remedy problems more effectively. Equally, lenders have been supportive, preferring to make debt for equity swaps or even advance suitably priced risk capital, rather than crystallise their debt through an insolvency process.”

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