January blues to blame for rise in insolvencies

By April 29, 2014Finance, News

Seasonal difficulties at the start of the year are to blame for a slight rise in the number of company liquidations revealed in today’s official insolvency figures, according to the insolvency practitioners’ trade body R3. However the underlying trend is for a continued fall in business failures.

The figures show there were 3,721 liquidations during the first quarter of 2014, up by 4.8% on the previous quarter. The number of Compulsory Voluntary Arrangements (CVAs) – which are typically used by retailers in distress – increased by 15.4% in the same period, although administrations and receiverships fell by 10.2% and 13.1% respectively.

Richard Wolff, the North West chair of R3 and Head of Corporate Recovery and Insolvency at JMW Solicitors, said: “For the past few years, the first quarter of the New Year has been a tough one for businesses.

“For those businesses reliant on a good Christmas period, failure to hit sales targets can lead to problems in January and February. Many businesses are approaching the end of the financial year during this period, which may bring financial problems to a head.

“Economic recovery is very welcome, but extra activity does put added pressure on businesses and this might also have helped push numbers up.

“Insolvencies have fallen from their peak during the recession and have been relatively stable for a while, although they haven’t fallen as far or as fast as they ordinarily do after a peak. However it is unlikely we’ll see any major changes in corporate insolvency numbers until interest rates are raised.”

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