The Insolvency Service has published the official insolvency statistics for the third quarter of 2011. In terms of company failures, the figures show:
Compulsory liquidations: 1,203 (-6.6%)
Creditors’ voluntary liquidations: 3,039 (+3.1%)
Receiverships, administrations and CVAs: 1,253 (+1.7%)
As regards personal insolvencies:
Bankruptcies: 9,567 (-13.9%)
Debt relief orders: 7,604 (+4.8%)
IVAs: 13,048 (+7.4%)
Overall, therefore, there was a very slight increase in company failures (although in a quarter in which a fall in the number is more usual), and a reduction in personal insolvencies. If you would like to see the statistics in greater detail, please visit the publications page of our website.
Meanwhile the unrelenting diet of economic doom and gloom, both in the UK and internationally, continues. The National Institute for Economic and Social Research is the most recent to predict a “strong chance” of a return to recession in the UK, even if the Eurozone manages to find a speedy solution to its woes. What is certain is that the UK economy faces a bumpy ride for the foreseeable future. In the real world of business, many continue to struggle in a weak and volatile trading context. The most recent Business Distress Index from R3, the insolvency trade body, found increasing signs of distress in almost all of the key indicators measured, particularly those around cash flow difficulties. The sharpest increases were in frequent use of the maximum overdraft facility, decreased profits and reduced sales volume. The number of businesses taking on new borrowing to pay down existing debt has doubled. More businesses are finding difficulty in paying invoices on time and more report selling assets in order to maintain cash flow.
Taking early advice on options and restructuring has never been more crucial. We always maintain that winding up should be seen as the last resort, and that where advice is sought at an early stage, it may often be possible to rescue at least part, if not all, of a struggling business.
Between us, the four most senior members of the team have, frighteningly, more than a hundred years’ of experience in business recovery, and so there is not very much that is new to us. We will always be driven by the need to give the best advice, not to maximize our fees; integrity matters.