Insolvency Figures Show Retailers and Construction Still Struggling.

9 May 2011

Corporate insolvencies increased by 366 to 5,435 in Q1 of 2011, from 5,069 in Q1 of 2010.  These figures include all processes.  Administrations, Receiverships, creditors voluntary liquidations, compulsory liquidations, company voluntary arrangements.

 The Insolvency Service figures show that construction and wholesaling and retail were the hardest hit, which showed increases in administrations of 23 per cent and 55 per cent respectively compared to the last quarter.

Compulsory liquidations, were down 17.2 per cent on the same quarter last year but creditors voluntary liquidations showed an increase of 11.2% on the same quarter last year.

So what would this suggest?

a) There are less businesses worth saving, but more that simply need to be closed down in an orderly way.

b) Lenders are hardening their attitudes to rescues, particularly pre-pack admins

c) It is harder and harder to save businesses because of the attitude of creditors or other issues (eg increased “red tape”)

d) Companies that were give time to pay deals by HMRC have now defaulted, and either don’t want to be rescued, or haven’t got the desire to fight anymore

e) It is just a blip as the figures from the worst of the recession are now coming out.

f) All of the above, none of the above, some of the above?

In general terms the recovery has been forecast as being uneven and the statistics appear to bear this out.

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