In January this year, I posted a blog trying to guess what was going to happen in the next 12 months. Given I’m now planning Christmas, and have been invited to the staff Christmas party, frankly it’s going to be the end of the year before I know it, and I’ll blogging about next year. So how did the predictions pan out?
Well, starting with the prediction I restrained myself from making as it was a bit obvious – retail is still struggling. JJB Sports, Clinton Cards, Pumpkin Patch, part of Optical Express, Peacocks, Hooters (Bristol & Cardiff), etc all entered Administration and have been either closed or pre-packed.
Is retail going to start to recover soon? The practical answer is probably, if only because we’re running out of shops to go bust. More seriously, economists are saying the UK is coming out of recession, those in work are starting to have disposable income again, and of course clothes and similar items do wear out and need replacing.
Looking at the predictions I actually made:
1. More bankruptcies and winding-up petitions – a bit of a mixed picture this one. Compulsory winding-up petitions (imposed by the Court, usually against the company’s will) were down 3.6% from the previous quarter, while other types of company insolvency were up 6.7% with the vast majority of the increase caused by company voluntary arrangements. This is actually positive as company voluntary arrangements mean the company continues to trade (saving jobs) but restructures its debts so it can survive. Bankruptcies saw a 27% drop in the most recent figures compared to the previous quarter, but 79.5% of bankruptcy petitions were brought by the debtor himself, not his creditors (so again, could be seen as an individual taking a conscious decision to deal with their debt). I can’t help but wonder if part of the drop isn’t the very high court fees which have to be paid to issue bankruptcy and winding-up petitions….
2. Pre-packs under threat – good news on this front (depending on your perspective of course). The government has dropped the proposal to limit pre-packs, which continue unabated, particularly in the retail sector.
3. Less employee claims in the Employment Tribunals – looking at the most recent set of statistics from the Ministry of Justice (1 April 2011 – 31 March 2012), there was a 15% fall in claims compared to the previous year BEFORE any fees are to be imposed next year. It’s a safe bet this drop is only going to increase once fees start to be charged.
4. Reduction of litigation due to asset values dropping – house prices are starting to rise and banks are starting to lend. Litigation is following its traditional pattern of booming in a recession, and according to the recent High Court statistics for 2011, there has been an average 12.25% increase of the number of claims, with breach of contract and debt claims in particular showing a 44% increase from last year. So I was wrong with this prediction unquestionably!
5. Reduction of “no win no fee” cases- for insolvency cases, the government has agreed to delay the implementation of the Jackson reforms until April 2015 at the earliest. Frankly, I suspect this reform will not be implemented at all for insolvency – HMRC, the Treasury, and the Association of Business Recovery Professionals all were against the idea and pointed out the only winner would be dodgy directors.
On balance, I might not have been 100% right, but I wasn’t 100% wrong, but a career in gambling does not await me. But given the rise in litigation, the survival of the CFA for insolvency cases and unfettered pre-packs remaining available, frankly I’m going to be busy enough for the foreseeable future!
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