Insolvency statistics

Record levels of individual insolvency

The number of people becoming insolvent in-creased by a quarter in the last three months of 2009 compared with the same period in 2008, according to official data.

Company failures soared to their highest level for 16 years in 2009 with 19,077 firms going into liquidation, up 23% on 2008 and the worst result since 1993.

The numbers suggest that the improvement in the economy seen towards the end of last year is reducing the rate at which personal insolvencies are rising. Bankruptcies rose 0.9 per cent between the third and fourth quarters of 2009. This was down from rises of 6.6 per cent and 9.3 per cent respectively in the second and first quarters.

Mark Allen at Grant Thornton said "We are seeing people with higher salaries coming to us as many who could previously cope with their monthly commitments and considered themselves relatively well off in the past are hit by a reduction in their monthly disposable income and falling house prices, which leaves them with few altenratives when facing up to their financial problems."

Mark Sands, director of personal insolvency at RSM Tenon, said: "Despite the recent news that the recession has come to an end, the impact of unemployment and falling incomes mean that we will see levels of personal insolvencies continue to increase into 2010 as the effects of the recession continue to linger.

"We should therefore expect to see a further rise of around 12% in annual insolvency figures this year to 150,000 and these levels are likely to remain until at least 2012."
Alec Pillmoor, head of personal insolvency at Baker Tilly, said: "Whilst the recent unemployment statistics have been more favourable, many families are finding it difficult to manage their finances with reduced hours of work. Our major concern is for 2010 as the predicted increase in interest rates and reductions in public sector spending may result in even more individuals entering insolvency."

There was better news with regard to businesses, however, with company liquidations totalling 4,566, down 1.7 per cent from the third quarter of 2009 and down 1.1 per cent from the fourth quarter of 2008.

There were 849 administrations across England and Wales in the fourth quarter.   This was down 58% year-on-year and the lowest number since the fourth quarter of 2007.

Among other forms of corporate insolvencies, receiverships in the fourth quarter of 2009 totalled 397, down from 410 in the third quarter but up 53.1 per cent from those in the fourth quarter of 2008.

The number of companies entering liquidation equates to approximately one in every 114 active companies compared with around one in every 150 active companies in 2008.

Most personal insolvencies - more than 85 per cent - were made at the request of the individual rather than by creditors, suggesting lenders are not rushing to put borrowers into bankruptcy. There were 5,348 debt relief orders, a new legal status aimed at those with no homes or other significant assets and almost no incomes.

Summer storage in St Andrews