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Insolvency

Company Liquidations to peak in 2010

A poll of 365 insolvency practitioners from industry body R3 concludes that insolvencies are set to rise in the UK despite the economy moving out of recession.

Company liquidations are expected to rise to 28,000 this year, falling to 27,000 in 2011. Figures from the 1980s and 1990s recessions show that the peak in both personal and corporate insolvencies occurred after the return to growth.

According to a survey from the Insolvency Service, there were 4,716 compulsory liquidations in the third quarter of 2009. Although this was down 13% on the corresponding period in 2008, personal insolvencies jumped 28.2% to 35,242 – a result, it is believed, of a growing number of small business owners opting for personal insolvency in a desperate attempt to keep their company afloat, using credit cards to finance their businesses and paying the consequences when pressed by card companies to settle their accounts.

Furthermore the World Bank has recently published a report showing that the cost of closing a business in the UK is higher than in many other countries with similar or even better recovery rates. The Office of Fair Trading (OFT) is therefore carrying out a study into the way corporate insolvencies are conducted in the UK to examine the structure of the market and look for features such as higher fees or lower recovery rates that could be detrimental to certain groups of creditors.

If you require any advice relating to insolvency please contact our commercial team at commercial@blasermills.co.uk