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Corporate insolvencies fall 10 percent 30 October 2015

The number of companies going bust in England and Wales has fallen 10 percent year on year, according to The Insolvency Service.

The government agency’s latest official figures for corporate failures show that an estimated total of 3,539 companies entered insolvency in the third quarter of 2015,
a 10.2 percent fall on the same period in 2014.

It also marks a 4.4 percent drop compared to the third quarter this year, with compulsory liquidations down to their lowest level since 1989.

A total of 612 companies were subject to a compulsory winding-up order between July and September, a 20.4 percent decrease on the previous quarter and 29.2 percent lower than a year ago. This was the main driver of the decrease in total company insolvencies.


Administrations and CVAs
There were an estimated 363 administrations in the third quarter of 2015, a decrease of 2.4 percent compared to the previous quarter and 5.5 percent lower than last year.

There were also an estimated 111 in creditors voluntary arrangements (CVAs), an increase of 32 percent on the previous quarter and 14 percent lower than a year ago. There was an estimated one administrative receivership.
Ian Gould, business restructuring partner at BDO, said: “Corporate insolvencies have been falling steadily since 2009. The fall of 10.2 percent was broadly to be expected, and shows that despite a recent slowdown in a number of key sectors, on the whole there isn’t a major cause for concern.

“The broader story is of a continuing recovery in the UK economy and particularly amongst mid-market businesses, which have seen turnover rise by 55 percent and profits rise by 110 percent since 2010.

“Paradoxically, one of the signs of a strengthening economy is that we usually see more businesses fail, while others thrive – we may see more of this over the next 12 months.

He added: “However, the current picture is not all positive, as problems are intensifying in the industrial and manufacturing sectors. Companies have toughened up and become more efficient since the financial crash, leaving them in robust shape.

“However, they are facing a toxic mix of stronger global competition, high business rates, increasing energy and wage costs, and pensions burdens which are pushing more of them into financial difficulty. The collapse of the UK steel industry is only the latest example of this.”

An estimated 2,451 companies entered creditors’ voluntary liquidation in the third quarter; a 4.3 percent fall compared to the same period in 2014.

By Marcel LeGouais

 

 

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