TRADE CREDIT MARKET BRACES FOR ARCADIA COLLAPSE

The trade credit insurance market is bracing for the expected collapse of fashion retail group Arcadia, which went into administration. An estimated £250m ($333.1m) of invoices could go unpaid if Arcadia goes under, according to trade credit insurance provider Nimbla. It is not clear how much of this would be covered by trade credit insurance. The Nimbla estimate comes from a model that is based on earlier public accounts and past retailer defaults of a similar magnitude. Any claims from Arcadia’s suppliers would add to the growing claims burden on the trade credit insurance sector as deteriorating economic conditions push up corporate insolvencies, leading to an increase in non-payment. The UK government has provided some support to trade credit insurers through a temporary reinsurance backstop. The scheme is scheduled to close at the end of the year. Nimbla is calling for the government to extend the scheme.