COMPANY INSOLVENCIES – ARE WE BACK TO NORMAL YET?
by Tim Corfield
Statistics issued earlier this month by the Insolvency Service for the first quarter of 2014 show the number of creditors’ voluntary liquidations are down (2,649 compared to fourth quarter of 2013 of 2,707) but the total of liquidations were slightly up when including compulsory liquidations (1,072 compared to fourth quarter of 690).
The number of liquidations is now getting much closer to ‘normal’ – in 2013 there was a total of 14982.
So what is normal? In the boom years before the recession the total number of company liquidations was;
2005 – 12,893 2006 – 13,137 2007 – 12,507
Based on these figures there could be a drop in the numbers of company insolvencies over the next few years of up to 15% – but there has been an increase of companies registered (in England and Wales) from 16.5 million in 2002 to 26 million by the end of 2013 – an increase of 58%!
How do the statistics compare in the recession of the early 1990’s to this one? The numbers of company failures were;
1991 – 21,827 2009 – 19,077
1992 – 24,425 2010 – 16,045
1993 – 20,708 2011 – 16,886
There have been many predictions of a surge in company failures when there is eventually an increase in interest rates and the banks withdraw support for ‘zombie’ companies. I’m not so sure. This recession has been different and the corporate profile has changed so much. The Bank of England is doing a pretty good job, so far, of managing the economy out of recession.
So, no real answers but interesting statistics!
In the meantime life and business goes on. The one thing to be certain of is that things will always change in a business – both internal and external environments. Should any change affect a business adversely it’s vital for the directors to take advice as early as possible – and that’s where we’d be pleased to assist.
If you have any clients or contacts that have such issues with their business please ask them to get in touch with me or Richard Owen for a free, confidential chat or meeting – we will be able to help!