Recovery kicks in as insolvencies fall again

By July 29, 2014Finance, News

The number of companies entering administration decreased for the fourth time in a row in the second quarter of 2014, to reach the lowest level since 2005, according to the government’s official insolvency statistics released today.

Figures from the Insolvency Service show there were 410 administrations during the quarter – 34.9% lower than the same period a year earlier. Company voluntary arrangements and receiverships also decreased, while liquidations fell to their lowest level on record.

Richard Wolff, North West chair of R3 and Head of Corporate Recovery and Insolvency at JMW Solicitors, said the figures reflected the improving economy. “While administrations and voluntary arrangements have remained at a pretty constant level for the past five or so years, liquidations have fallen gradually since the recession. Although there has been the occasional quarterly jump, things have always fallen back again the next quarter,” he said.

“Other than an improving economy, not much has changed to have a big impact on insolvency numbers. Some sectors, like the legal sector have encountered regulatory challenges, which has led to higher insolvency numbers there, but for everyone else the past few years have been the same story: low interests rates and lenient lenders.

“An interest rise could cause some businesses extra problems, but it would have to be more than a couple of quarters of a percentage point to make any real difference.”

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