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Corporate insolvencies in decline 3 May 2013

Company liquidations in England and Wales dropped to 3,619 in the first quarter of 2013, down 15.8% on a year earlier, according to the latest figures.

The Insolvency Service (IS) revealed that this was made up of 1,043 compulsory liquidations, up 11.8% on the previous quarter, and 2,576 creditors’ voluntary liquidations, which fell 10.9% on the fourth quarter of 2012.

There were 935 other corporate insolvencies during the first three months of 2013, comprising 236 receiverships, 557 administrations and 142 company voluntary arrangements, representing a 27.5% decrease on the same period in 2012.

Mike Jervis, business recovery partner at accountancy firm PwC, said: “The first quarter has historically been the peak for insolvencies. However, corporate failures at such low levels, particularly of administrations, have not been seen since 2005 and before.

“This is in spite of the many high profile retail casualties that collapsed during the first quarter.”

He added that the total number of retail insolvencies fell by 47% between the first quarter of 2013 and the same quarter a year earlier.

Individual insolvencies in England and Wales also fell in the period to 25,006, down from 12.9% on the first quarter of 2012.

The figure was made up of 6,663 bankruptcies, 7,219 debt relief orders (DROs) and 11,124 individual voluntary arrangements (IVAs).

The IS said that bankruptcy numbers had been impacted by the introduction of DROs in April 2009.

Giles Frampton, vice president of insolvency trade body R3, pointed out that overall personal insolvency levels are back to where they were in 2008.

He added: “Analysing the figures, while bankruptcies and DROs continued to fall, IVAs have increased over the first quarter of 2013.

“Perhaps some are being prevented from accessing other formal insolvency procedures due to the barriers to entry – the upfront fee (£700) in the case of bankruptcy and the asset and debt thresholds for DROs.”

Frampton urged the government to consider payment of the bankruptcy fee by instalments and to re-examine the thresholds for entry into DROs to ensure that individuals in debt are able to access a “suitable” debt relief solution.

 

 

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