Nearly 6,500 Bristol businesses were in ‘significant financial distress’ between July and September as the coronavirus pandemic hit the city, according to a new report.
The total of 6,476 was a 4% increase in the number of firms struggling in the previous three months, according to the figures from independent insolvency firm Begbies Traynor. 
Hardest hit sectors were real estate & property and retail, increasing 9% and 4% respectively between the second and third quarters.
And even though some sectors showed some signs of relative stability – including media and financial services – many businesses will be bracing themselves for what is to come over the next three to six months, said Begbies Traynor Bristol office partner Paul Wood.
“Bristol businesses continue to face multiple challenges – from unpredictable consumer demand to restrictions on the way they offer their services, as well as managing the direct health impact of the pandemic on their workforce,” he said.
“This is undoubtedly taking its toll, as reflected in these regional figures.
“It is noteworthy that the number of businesses in significant distress has grown substantially in the past three months, even with court capacity significantly reduced due to the pandemic.
“As such, there could be a significant number of insolvencies when the courts do get back to anywhere near normal capacity and attempt to clear the backlog of pending cases. This, combined with the end of the furlough scheme and other government support measures, is likely to have a material impact on the business failure rate.”
He said a combination of a grim economic data and very poor trading conditions, particularly in the most vulnerable sectors such as hospitality, would take its toll and is expected to feed through to first quarter of next year as restrictions continue.
Nationally, the latest Begbies Traynor Red Flag Alert research for the third quarter recorded 557,000 businesses in ‘significant distress’ after the largest quarterly leap in financially distressed companies since 2017.
This 6% increase (from 527,000 in quarter two) comes despite a backlog of court action preventing many County Court Judgments (CCJs) and winding-up petitions being issued.
Data shows there were 26,244 CCJs lodged against companies during March, April and May in 2019, but only 10,045 lodged during the same period in 2020, a fall of 62%.
The number of winding-up petitions lodged during March, April and May last year were 1,019 but just 101 during the same period this year – a massive fall of 90%.
The Red Flag Alert has been measuring and reporting corporate financial distress since 2004, and over that time has become an industry benchmark of the underlying health of companies across every sector and region of the UK.
It measures corporate distress signals, drawing on factual legal and financial data from a wide range of relevant sources.
Firms with ‘significant’ problems are those with minor CCJs (of less than £5,000) filed against them or that have been identified by Red Flag’s credit risk scoring system, which screens companies for a sustained or marked deterioration in key financial ratios and indicators, including working capital, contingent liabilities, retained profits and net worth.
