Written by: Keith Tully
Reviewed: Friday 26th October, 2018
The number of companies entering insolvency increased at the sharpest pace recorded since 2009 during the third quarter of this year.
Official figures from the Insolvency Service show a 19 per cent rise in corporate insolvencies during the third quarter of 2018 as compared with the same three months of last year.
There was also a 9 per cent increase in the number of corporate insolvencies recorded across England and Wales in the third quarter of this year compared with the second quarter.
The Insolvency Service has said that the rising number of insolvency cases is being driven primarily by a surge in creditors’ voluntary liquidations, which during the third quarter of this year reached the highest levels recorded since the first quarter of 2012.
In total, there were 4,308 businesses newly registered as being insolvent during the period between July and the end of September across England and Wales, which is a level not seen since the early months of 2014.
The construction sector accounted for the most corporate insolvency cases recorded in the 12 months to the end of Q3 2018, with 2,924 businesses in the field having ran out of money at some point over the course of the preceding year.
Second on the list of most heavily impacted sectors was that categorised by the Insolvency Service as being the “wholesale and retail trade; repair of vehicles”, which saw 2,270 new company insolvencies during the 12 months to end of September 2018.
R3, the insolvency and restructuring trade body, has highlighted the point that high-profile insolvency cases can have significant knock on effects elsewhere in the economy and particularly on any interrelated sectors.
“For every struggling retailer unable to pay its debts, there will be numerous suppliers as well as shop-fitting or delivery firms who come under pressure, while there have been well-publicised troubles in sectors like construction, too,” commented R3’s vice president Duncan Swift.
“The key causes of insolvencies seen by the insolvency profession are familiar. Rates problems, particularly for retailers, are frequently mentioned, and the chancellor’s rates-relief announcements in the Budget have come too late for some,” he added.
Mr Swift also warned company directors to watch out for “unscrupulous advisers” who might try to offer unworkable solutions in their own interests rather than in support of their clients.
“We would advise checking the credentials of all sources of advice, and sticking to advisers who are regulated, licenced, and accountable,” he said.
17th April 2019
HMRC applied to see more than 4,000 UK companies closed down over the course of 2018 and is being too aggressive in its pursuit of tax-related debts.Read More
12th April 2019
British high streets saw the sharpest rate of net store closures on record over the course of last year, according to a new set of figures.Read More