Insolvencies fall significantly in the Q1 of 2013

6 May 2013

Figures from the Insolvency service showing the fall in the number of insolvent businesses

Table I. Company Liquidations in England and Wales (seasonally adjusted) 1
% change – Q1 2013 on
2012 Q1 r
2012 Q2 r
2012 Q3 r
2012 Q4 r
2013 Q1 p
Q4 2012
Q1 2012
Company Liquidations
4,297
4,064
3,954
3,823
3,619
-5.3
-15.8
of which:
Compulsory
1,204
1,028
1,078
933
1,043
11.8
-13.4
Creditors’ Voluntary2
3,093
3,036
2,876
2,890
2,576
-10.9
-16.7
Table II. Other Corporate Insolvencies in England and Wales (not seasonally adjusted) 1
% change – Q1 2013 on
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1 p
Q1 2012
Receiverships2
336
333
277
276
236
-29.8
Administrations
779
625
548
580
557
-28.5
Company voluntary arrangements3
175
3523
161
151
142
-18.9

For the first time since 2008 all forms of insolvency procedure have fallen in number.  Liquidations have fallen some 16% in 2013 when compared to 2012 and administrations and company voluntary arrangements have fallen 30% and 19% respectively.  In fact the numbers are now down to almost pre credit crunch figures

The reasons for this are mixed.  HMRC have adopted a softer stance leading up to the implementation of Real Time Information (RTI) and there has been a significant drop in winding up petitions.  However, the most marked change is in the number of administrations.  These are usually driven by the banks and other secured lenders.  Business confidence is starting to improve and it could be they are holding back on calling in any loans.

It also seems that many companies that have held on for this long are unlikely to fail now.  An increase in economic activity will see increased competition put pressure on weaker companies and there is always the danger of ambitious companies overtrading.