Insolvency statistics show slight increase in liquidations

1 August 2013

In the last year or so we have been used to seeing Quarter on Quarter fall in liquidations and administrations. However, the latest statistics from the insolvency office indicates that this trend has reversed.  Indeed we have seen a slight increase in liquidation enquiries. The levels are still below those seen in 2012.

Given the state of the economy this is not surprising you may be surprised.

OK, what we mean is that the economy has been flat lining for a long period and companies were holding on for better times and when the upturn finally came these last few months many companies that had hoped for an upturn in business didn't see it materialise.  Consequently, they decided to throw in the towel and start again. What is more some trade creditors wanting to expand decided that the time had come to be aggressive towards companies that owed them money and so forcing their hand.   It should be noted that the level of compulsory liquidations remain very low and this is reflected in the falling number of winding up petitions being issued which now stand at the lowest levels since pre-recessionary times.  Given that HMRC issue some 60% of petitioners this shows that they are continuing their soft approach.

The level of administrations has also risen a bit compared to last quarter but these still remain at historic lows.  The reversal of the downward trend may be due to the banks being a bit more aggressive in the improved economy.

Table II. Other Corporate Insolvencies in England and Wales (not seasonally adjusted) 1
% change – Q2 2013 on
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2 p
Q2 2012
Receiverships2
333
277
276
236
192
-42.3
Administrations
625
548
580
557
622
-0.5
Company voluntary arrangements3
3523
161
151
142
160
-54.5
Source: Companies House p = provisional, 1 Longer series back to 2003 are presented in the accompanying detailed tables. 2 Includes Law of Property Act receivers (see “Notes to Editors” paragraph 21).This includes 104 new CVAs recorded under “Health and Social Work” in June reflecting the fact that on 20 June 2012 156 companies in the Southern Cross Healthcare Group had CVAs approved.  

Of course, one should not read too much into one quarters statistics but it will be interesting to see how things move on.