Company insolvency figures rise

The number of corporate insolvency cases in England and Wales was up in the final quarter of 2011, new data has shown.

Figures published today (February 3rd) by the Insolvency Service revealed that the tally of business failures was 0.4 per cent up on the third quarter, with the total of compulsory liquidations and creditors’ voluntary liquidations reaching 4,260.

This was also 7.2 per cent higher than the figure for the same period in 2010, which may suggest that for many businesses, surviving the recession was something they could manage, but that they still needed a stronger recovery than has been forthcoming to ensure their longer-term survival.

And for some companies, business may have dwindled because of a dependency in part or whole on public sector contracts, with these being reduced due to austerity cuts.

The tally of compulsory liquidations was 1,389, which was up by 14.1 per cent on the previous quarter and 16.1 per cent on 12 month earlier, while the 2,871 creditors’ voluntary liquidations were down 5.1 per cent on the previous three month period, but 3.4 per cent up year-on-year.

Nor were these figures the only evidence of a worsening situation. The fourth quarter also saw 1,173 other corporate insolvencies (this figure was not seasonally adjusted), up 5.1 per cent on a year before.

Of these, 324 were receiverships, 658 were administrations and 191 company voluntary arrangements.

For people involved with businesses that are performing badly and faced with the possible loss of business, these figures may seem daunting. But they might also indicate that such firms are in good company and that shying away from taking action is not a wise way to proceed.

The Money Advice Trust responded to the figures by noting that its Business Debtline took record numbers of calls in 2011, with common problems for small firms being late payments, issues with suppliers and trade shortfalls.

Spokesperson Nicola Connop said: “Whilst insolvency can seem like a daunting process, there are occasions where it will be the best option, both financially as an individual and also with a view to trading again in the future.”