The number of company liquidations and personal insolvencies in England and Wales has decreased, according to recent figures.
Findings published by The Insolvency Service reveal that compulsory liquidations and creditors’ voluntary liquidations have fallen to 3,619 in the first quarter of 2013. This is a 5.3% decrease on the previous quarter and is 15.8% less than the same quarter last year.
Meanwhile, there were 935 corporate insolvencies in Q1 of 2013, a decrease of 27.5% on the same period a year ago. This comprises:
- 235 receiverships
- 557 administrations
- 142 company voluntary arrangements
What’s more, the number of personal insolvency cases also reduced to 25,006 which is a 12.9% decrease from the same period in 2012. This includes:
- 6,663 people declaring bankruptcy
- 7,219 taking up Debt Relief Orders (DROs)
- 11,124 entering Individual Voluntary Arrangements (IVAs)
The number of DROs is higher than total bankruptcies for Q3 but bankruptcy orders have been lower than IVAs for the last eight quarters.
What is the long-term perspective?
In the 12 months ending Q1 in 2013, 1 in 154 active companies went into liquidation. This is down from 1 in 144 the previous quarter and remains low in contrast to the average 1.2% seen over the past 25 years.
From January- March this year, there were 2.6 million active registered companies compared to only 900,000 in the early 1990’s.
Joanna Elson OBE, Chief Executive of the Money Advice Trust, argued that the rate of insolvencies has been declining since 2010 however, that’s because many people simply can’t afford to go bankrupt.
She said: “Getting the £700 (£525 for the deposit plus £175 for the court fee) together to petition for bankruptcy is not easy for people already struggling with debts. The result is that people are often left to drift in a financial black hole where they can’t afford to repay their debts, can’t afford bankruptcy, and have no other way out.
Jonathan Munnery, Director of Real Business Recovery, added: “Times are tough for many businesses however, the overall reduction in company liquidations is positive. We must remain realistic though. Things may look like they are getting better but UK businesses still have many challenges to conquer.”