New R3 chairman warns of rise in administrations

Andrew Walker, formerly vice chairman of R3 and also a partner at Irwin Mitchell in Leeds, has just taken over as chairman for the organisation, which promotes best practice for the insolvency profession.

He said: "There are many companies in the region that have managed to claw through the recession, but as we face the prospect of interest rate rises and other pressures, we fear we will see another rise in administrations next year."

His comments came as business advisory firm Deloitte revealed that the number of UK administrations fell 36 per cent in the first nine months of the year.

There have been 1,648 administrations in 2010 so far, compared with 2,589 in the same period in 2009. Furthermore, casualties have fallen to a pre-recession low with administrations down 20 per cent from 2,061 administrations in the same nine-month period in 2006 – the last full year before the financial downturn began.

Ian Brown, reorganisation services partner at Deloitte in Leeds, said: "Whilst the economy holds its breath for the outcome of the Comprehensive Spending Review, these figures offer a glimmer of hope. For the first time since the financial crisis began, we're beginning to see a consistent drop in the numbers of companies hitting the wall. This can only be a good thing."

The decline in administration figures is being seen across the industry sectors. The most pronounced drop was seen in the retail sector, with administrations down 50 per cent on the same nine-month period in 2009, and down 13 per cent on the previous quarter.

Mr Brown added: "How this develops in the coming months will be a different story, however. UK consumers are already the most indebted in the world. With the impending government spending cuts, the forthcoming rise in VAT and the impact of higher income taxes and National Insurance, there is no question that consumers will have less disposable income.

"They will have to economise and where they choose to make their cutbacks will clearly impact the industry. Whilst we are unlikely to return to 2008/2009 retail administration levels, there are tougher times ahead. It would not be surprising to see more retail casualties."