Welcome to 2022 and our Winter Newsletter...

"Welcome to 2022!

A quick reflection on 2021 before we move forwards into 2022.

For anyone associated with the insolvency market, a polite term for the year is that it was mixed. As we know the level of Government support on offer through the Covid period, whether through HMRC deferral, CBILS and other loan guarantee mechanisms, and furlough alongside rent deferral arrangements led to most businesses, including those that should have been legitimately struggling anyway, having lots of cash available to them, and lower borrowing on working capital facilities.

One way in which we saw the positive affects of businesses having lots of cash was in our auctions where demand for good quality second hand kit led to asset values increasing and some spectacular results on our auctions that enabled the insolvency practitioners we were working with to also get better than expected recoveries. The second hand market was additionally boosted by the lack of new kit being available as OEMs struggled to produce equipment due to shortage of parts, chips etc.

The overall impact on the insolvency market was 30+ year lows. As the year drew to a close, however, we began to see some stresses returning, particularly at the smaller end of the market, with an expectation of this spreading to larger businesses as cash starts to be burned.

Turning to 2022 it is difficult to make predictions. I expect if we surveyed each and every one of you the thoughts on how 2022 will develop would be different. As I have said before, the only certainty that remains is that there will be uncertainty.

Whilst the overall economy is returning to pre-pandemic levels, there will be winners and losers. High energy prices, increasing inflation, workforce shortages and businesses that have not sort advice and changed their models from pre-pandemic issues will lead to increasing levels of insolvency and it appears that no business can continue to rely on the Govt. stepping back in with support. Whilst I don’t predict any massive jump in insolvency, I do think gradually increasing levels over an extended period does seem likely.

This will be good for us, our insolvency related clients and the ABL market that has been supported by many M&A type opportunities but seen less of the re-fi and turnaround markets activity in the last year.

As for LSH Asset Advisory, I am pleased to report that we had a strong year in 2021 and we are well positioned for further growth in 2022. Our key strengths remain that we are able to look at all types of opportunity and asset whether it be Plant, Property, Inventory, Business Sales and Auctions on the business restructuring side of our business through to all assets on our ABL offering. We also have total UK geographical coverage which means we can respond quickly to client requirements wherever and whatever they may be.

We would like to thank all of our clients for their support in 2021 and we look forward to working with you again in 2022. If you are reading this and you have not yet used us please do give us a try, you will be very happy you did.

Wishing you a strong and successful 2022!"

Alan Austin - National Head of Asset Advisory