Company administrations at lowest in a decade

By January 29, 2015Finance, News

The number of companies placed into administration last year was the lowest in a decade, according to the official insolvency figures released today.

The figures from the Insolvency Service show there were 1,790 administrations during the year, 24.3% fewer than in 2013, and the lowest number since 2004. Other types of business failures also fell except for compulsory liquidations, which rose by 2.9 per cent to reach 3,738.

The rise could indicate that creditors are taking a tougher approach, according to the insolvency trade body R3.

Richard Wolff, who is North West chair of R3 and also Head of Corporate Recovery and Insolvency at JMW Solicitors, says: “Although corporate insolvency has fallen over 2014, it’s notable that compulsory liquidations have risen slightly. This may be a sign that creditors may be becoming less lenient to debtors than they have been since the financial crisis.

“Overall though, despite a very slight rise in insolvencies in the last quarter, low interest rates and falling inflation are combining to help keep insolvencies low. The number of companies going through an insolvency process is almost down to pre-financial crisis levels, although it’s taken seven years to get to this point.”

Speaking of the prospects for 2015, he added: “In the short-term, the first quarter of the year often sees an increase in insolvencies as companies whose Christmas revenues failed to meet expectations consider their options. After that, market changes and economic uncertainty caused by election results here and in particular, abroad could also have an effect.

“How big an impact eventual interest rate rises will have on businesses remains unknown. Although initial rate rises are likely to be very small, there are many businesses – and households – already at their financial limits.”

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