Insolvencies 'epidemic' is forecast by Tenon

Calls for help to bail out businesses in sectors that are struggling the most have soared almost threefold in the past six weeks at Tenon Recovery, the accountancy firm's turnaround, restructuring and insolvency arm.

"The symptoms we are seeing now are a precursor to a potential epidemic of insolvencies in 2009," said Carl Jackson, head of Tenon Recovery.

"It is quite usual for some non-seasonal businesses to turn off the lights in the run-up to Christmas as they know they will not be able to survive in the New Year, but we have never seen such a broad spread of businesses fail so early."

Jackson said the most calls for help were coming from retail, restaurant, motor-industry, property and leisure businesses.He added that he is particularly worried at the extent to which businesses have allowed their profit margins to be slashed as they chase consumers' dwindling cash.

"Little fat is being left by these businesses to weather the near-hibernation conditions which have been forecast for the tough first quarter of next year," he said.

He added that the major signs of a business in trouble are a weak equity base, low profits or a move into losses, high leverage particularly if its comes after recent acquisitions, weak management and dependence on one or just a few key customers.