Corporate administrations have dropped to a pre-credit crunch low, according to analysis by business advisory firm Deloitte.
Research shows that the first six months of 2010 saw 1,065 administrations, down 43% on the same period last year, and 26% lower than the first half of 2006, the last full year before the financial downturn began. In addition, administrations dropped 18% in the second quarter of 2010 compared with the first three months of the year.

This decrease in administrations is being seen across a broad spectrum of industries. Retail administrations fell by a massive 57% in the first half of this year, compared with the same period in 2009. Similarly, property and construction failures are down 43% year-on-year, while manufacturing administrations fell by 46%.

Deloitte reorganisation services partner Lee Manning commented: "Whilst Deloitte's latest CFO Survey revealed increasing fears of a double dip recession, these figures paint a more positive picture and may provide a corporate confidence boost. The proactive approach adopted by companies and lenders alike has had, and continues to have, a positive effect in most distressed situations. By acting sooner, companies have been able to remedy problems more effectively. Equally, lenders have been supportive, preferring to make debt for equity swaps or even advance suitably-priced risk capital rather than crystallise their debt through an insolvency process."

He added: "We are seeing a steady decline in administrations and this is certainly a positive sign that the climate is stabilising. I would be very surprised if administration levels increased dramatically this year; rather I would expect the second half to mirror the levels of activity we've seen in H1."

Mr Manning said that retailers have experienced a more buoyant six months, as many picked up market share left by those businesses that failed during the high number of retail administrations in 2008 and 2009.

He concluded: "Clearly the economic situation will remain challenging and whilst increased VAT in the New Year won't have a material impact on the prices of most products, this won't help consumer confidence either. To date retailers have been positive, responding well to the changing environment, managing their cash flows and stock levels appropriately, as well as having successful discussions with landlords over spreading the burden of rent and service charges. I expect this level of engagement to continue, with CVAs and informal arrangements with creditors being used as a constructive alternative to administration."