Member Article

Company liquidations and personal insolvencies fall

The number of company liquidations in England and Wales has decreased to 3,619 in the first quarter of 2013.

The figure represents a 5.3% change on the previous quarter, and is 15.8% less than the first quarter of 2012.

A further 935 corporate insolvencies occurred in Q1 2013, comprising 236 receiverships, 557 administrations and 142 company voluntary arrangements, a decrease of 27.5% on the same period last year.

Personal insolvency also continued to fall, with 25,006 people entering into bankruptcy, Individual Voluntary Arrangements (IVAs) or taking up Debt Relief Orders (DROs) during the first quarter.

Nick Reed, Insolvency director at PwC, said: “Although an overall reduction in personal insolvency numbers is always positive, we must remember that the numbers seen today are still three times higher than those seen ten years ago which are driven by IVAs and DROs, which in recent times have been at a consistent level. In addition, there are significant numbers of informal debt arrangements.

“Times are still tough for people with self-employed traders feeling the pressure in particular, employment remaining uncertain and inflation continuing to rise. However, personal insolvency numbers would be a lot higher without the current record low interest rates.”

Steve Ross, chair of insolvency trade body R3 in the North East and partner in the Restructuring department at RSM Tenon, said:
“Today’s drop in corporate insolvency could signal that pressure on businesses may be starting to ease, supported by R3’s research recording fewer distress signs from business owners. The total number of Company Liquidations in the first quarter of 2013 has fallen 5.3% from the previous quarter and 15.8% year on year. Administrations are also down 28.5% year on year.

“R3’s research also indicates that the number of businesses reporting distress declined significantly this quarter from 54% in November 2012, to 40% in April 2013. However, growth remains hesitant and businesses are still facing significant issues. According to R3’s latest research 53% of businesses reported no signs of growth (for example increased sales or profits).

“Over a third (34%) of north east businesses report that the biggest problem they currently face is the rising cost of fuel and utilities, followed by reduced consumer spend (27%). Concerns over utility bills as well as revenue show that businesses are being squeezed on both sides.

“While things may not be getting worse, there are still challenges to overcome.”

This was posted in Bdaily's Members' News section by Tom Keighley .