Number of 'distressed' UK firms rises six-fold

IT sector did not escape the carnage in Q3 as 4,566 UK firms faced "critical problems", compared to 791 in Q3 2007

The number of distressed UK firms rose almost six-fold year on year in the third quarter of 2008, with IT among the hardest hit sectors.

That’s according to corporate restructuring firm Begbies Traynor, which said 4,566 firms faced “critical problems” such as county court judgements of more than £5,000 or winding-up petitions during the quarter. This compares to just 791 in Q3 2007.

The research, reported this morning in the Financial Times, indicated that the housing, construction and property sectors were among the worst hit.

But IT firms have not escaped the carnage, with “critical problems” in the sector rising 627 per cent on an annual comparison.

The newspaper quoted Ric Traynor, executive chairman at Begbies Traynor, as saying: “The recent events in the banking sector herald a return to days gone by - much tighter credit terms and businesses needing a stronger case to convince bankers to support them.

“Stricter lending criteria and the inability to secure funding mean many businesses that might have relied on additional credit to see them through a temporary downturn no longer have that option.”