UK company failures rise amid fears Iran war will push collapses up

(Alliance News) - The number of companies in the UK collapsing into administration jumped by nearly a third last month, official figures have shown, as fears mount that cost pressures from the Iran war could push more firms to the brink.

The Insolvency Service said company administrations rose 30% year-on-year in February to 146, maintaining high levels seen in January when 152 firms called in administrators.

Overall, company insolvencies across the board were 7% higher when compared with January, at 1,878, but were 7% lower on an annual basis.

Experts said the cost shock being caused by the Iran conflict and rocketing oil prices could push company failures even higher, with inflation set to rise once more and interest rates now expected to stay higher for longer.

A number of high profile firms have gone bust so far this year, affecting thousands of jobs, including American-inspired restaurant chain TGI Fridays, accessories retailer Claire's and Revolution Bars owner The Revel Collective.

On Monday, car park operator NCP added to the list, calling in administrators after seeing losses mount in a move putting 682 jobs at risk.

Giuseppe Parla, restructuring & insolvency director at Menzies, warned a further pick up in insolvencies is expected over 2026 if the Iran conflict is not resolved quickly.

He said: "For companies already operating on tight margins, rising costs and uncertainty could quickly translate into further financial distress.

"As a result, we could see insolvency numbers continue to rise in the months ahead."

We're already seeing business owners becoming more cautious about investment decisions, choosing to wait and see rather than commit while costs and demand remain uncertain.

Tom Russell, president of R3, the trade body for restructuring & insolvency specialists, said: "Sectors with high energy usage or thin margins, including hospitality such as hotels and restaurants, may be particularly exposed, and could feature more prominently in the insolvency figures as the year progresses.

"We're already seeing business owners becoming more cautious about investment decisions, choosing to wait and see rather than commit while costs and demand remain uncertain. That hesitation, combined with rising overheads, means some businesses that were just about coping may now find themselves under renewed strain. This is likely to have a knock-on effect to insolvency rates in the coming months as higher costs make their way through to supply chains and balance sheets."

The latest data showed that creditors' voluntary liquidations were behind the month-on-month rise in corporate insolvencies in February, up 11% at 1,473.

On an annual basis, company voluntary arrangements also saw a big increase, with 10 recorded last month versus seven a year ago.

The Insolvency Service also said the construction, wholesale retail and hospitality sectors were among those with the highest number of company failures in the year to January, accounting for 17%, 16% and 14% of total cases respectively.

By Holly Williams, Press Association Business Editor

Press Association: Finance

source: PA

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