Four Year Low for Insolvencies

Figures from the Insolvency Service show that company liquidations in England and Wales in Q3 2013 were down 5.3% on the previous quarter, and down 15.8% on the same quarter in 2012. Personal insolvencies also dropped in the first quarter of 2013 to 25,006, 12.9% less than the same period 12 months ago.

Bev Budsworth, managing director of The Debt Advisor, said: “It’s great to see levels of corporate and personal insolvency continuing to fall. This is a welcome bit of good news for all of us, but we mustn’t get complacent and must realise that there are still tens of thousands of people with serious levels of debt, facing wage freezes, redundancy, benefit caps and rising prices in an economy that is showing little or no growth.

“However, although liquidations and corporate insolvencies in general are down, they do tend to mask the true extent of the problem. In 2012, around 20,000 companies were wound up and for every one of these, at least a further 80,000 to 100,000 ran out of funds and were struck off with creditors, having no chance of making a recovery.

“If you look at the figures from the Centre for Retail Research, 2013 looks like it could be even worse with over half the number of companies failing in the first four months of this year as did throughout the whole of 2012.

“Up to the end of April this year has already seen off 28 retailers and effectively closed nearly 1,900 stores which has affected over 18,500 employees. Many of these companies could possibly have survived with more support from banks, who have removed overdraft facilities with little or no notice, or with more time to help them do deals with their creditors.”

Bev’s comments come at a precarious time for the economy, with marginal growth of only 0.3% and the cold weather in March being blamed for a dip of 0.7% in retail sales when compared to the previous month.

Bev continued: “Looking at the figures for County Court Judgements, we see a slightly rosier picture. The value of corporate CCJs in the first quarter of this year was 68.7 million, nearly 21% less than the figure seen in the corresponding quarter of 2012. Likewise, the actual number of corporate CCJs has reduced by around 10%, from 18,722 in the first quarter of 2012 to 16,847 in the first quarter of this year.

“It does point to the fact that although there are glimmers of improvement for the economy, we are certainly not out of the woods yet.”