The number of recruitment agencies going into administration increased for the third consecutive six-month period at the end of 2009.

In the second half of the year 57 recruitment companies went into administration, compared with 45 during the same period in 2008, according to monitoring service Business Sale Report.

Many of the businesses that went into administration have gone on to continue operating in some form.

Among the agencies that went into administration were some which reported multi-million-pound turnovers in their last filings with Companies House, including Berry Recruitment (company number 3471551) in October and G P H L (company number 4395031) in November.

Bob Young, a partner at business rescue, recovery and restructuring specialist Begbies Traynor, said: “I have seen a significant increase in problems in the recruitment sector this year (2009). The main reason for this is the general downturn in the market.  We have seen the headline unemployment figures rise and it is easier for employers to lay off temporary workers first.” 

A company enters into administration when it is unable to meet the demands from its creditors. At this point an administrator will be appointed to take charge of its affairs and try to maximise the value of the business.

The recruitment companies that went into administrations during the second half of 2009 are listed in the link at the top right of the page (Related Links). For further analysis of the situation, see the 20 January edition of Recruiter.