Liquidations on the rise in 2014

28 April 2014

Latest statistics from the Insolvency Service show compulsory liquidations increased by 53.1% in the first quarter of 2014 compared to the third quarter of 2013 (a total of 1,072 down to 700). However, these figures could be seen as misleading as they represent the quietest period of the year compared to one of the busiest quarters from January to March.

The fact that compulsory liquidations are on the rise suggests HMRC and trade creditors are getting tougher on insolvent businesses. Interestingly, the number of Creditors Voluntary Liquidations (CVLs) fell by 7.1% since the previous quarter, but compared to Q1 last year, statistics show they have increased by 2.9%.

Looking at all other insolvencies (which includes administrations, receiverships and CVAs), there has been a reported fall of 2.8% on the same quarter last year. The number of administrations has slightly increased but CVAs have stayed at the same rate. The most noticeable change is the rise in liquidations.

In the 12 months leading to the end of the first quarter of 2014, the highest number of company liquidations occurred in the construction industry, followed by retail and wholesale sectors.

A reason for the rise in liquidations could be due to the slump in sales at the start of the year as well as perhaps poor sales results after the festive period.

Overall, including the compulsory liquidations statistics, UK corporate insolvency volume have risen year on year by around 3.3% versus 2013. So much more modest than the headline but still higher than a year ago.