UK sees record number of individual and company insolvencies

Discussion in 'Economics' started by ASusilovic, Aug 7, 2009.

  1. A record number of people in England and Wales were declared insolvent during the second quarter, according to official figures that also showed that more than five thousand companies went into liquidation.

    The number of individual insolvencies rose by 27.4 per cent on the year to 33,073 in the second quarter, which the government’s Insolvency Service said was the highest level since records began in 1960.

    Its figures showed there were 5,055 compulsory liquidations and creditors’ voluntary liquidations in the second quarter, an increase of 2.9 per cent on the previous quarter and an increase of 39.1 per cent on the same period a year ago.

    But the number of companies being placed into administration in England and Wales dipped to 1,027 in the second quarter, from 1,311 in the first quarter.

    David Dunckley, a partner at Grant Thornton, professional services firm, said: ”The number of failing UK companies is still high, but the figures seem to be reaching a plateau. Despite early signs of optimism, corporate insolvencies tend to lag economic performance. We therefore expect to see high levels of failures into 2010 and beyond.”

    The government’s insolvency service said about 1 in 120 active companies went into liquidation in the twelve months ending in the second quarter, which was up slightly on the previous quarter when the figure was about 1 in 130.

    Andrew MacCallum, managing director of Alvarez & Marsal, a restructuring firm which is handling the restructuring of Lehman Brothers said: “We are merely at the end of the first wave of insolvencies in this recession. More than five thousand companies may have gone into administration in the last quarter, but we can expect to see that figure exceeded in every quarter until at least the end of 2010.”

    Geoff Carton-Kelly, a restructuring partner at Baker Tilly, accountancy firm said the rise in insolvencies was unsurprising given the tough economic conditions. But he noted that the rise is likely to have been blunted by the extended payment terms being offered by banks, Revenue & Customs and landlords. He said if this supportive approach changed, “it could result in a rise in insolvencies as problems previously delayed return with a vengeance.”

    He said that personal bankruptcies were likely to continue to rise, as job losses increased. But he noted that a large number of people, an estimated 700,000, had enrolled in debt management plans, who have been saved from being added to the insolvency statistics.
  2. frankly americans do not care abt..UK or canada. or any other country on earth maybe except China