Corporate insolvency figures show downward trend

According to the latest figures from the Insolvency Service, the number of company liquidations in England and Wales in the second quarter of 2014 decreased compared with the same period last year, and administrations, company voluntary arrangements and receiverships were also lower than a year ago.

Commenting on the latest figures, Graham Bushby, Head of Restructuring and Recovery at Baker Tilly said: ‘In the past, we’ve seen an increase in corporate insolvencies as we have emerged from recession, but this isn’t the case this time around. In fact, the number of company liquidations, administrations, company voluntary arrangement and receiverships are all down on the same period last year.  There are many reasons for this, not least of which is the continued record low interest rates which have enabled many companies to struggle on despite serious underlying problems.  Many of these companies – and particularly those who have been placed onto interest only deals with lenders – will have to brace themselves for rate rises over the next few years. For some, the gradual and limited rate rises promised by the Bank of England will be just about manageable, for others it will be the final straw.’

The number of companies entering creditors’ voluntary liquidation decreased for the fourth consecutive quarter, and in Q2 2014 was 18.1% lower than in the same quarter a year earlier, and the lowest since Q1 2008.

The number of companies subject to a compulsory winding-up order also decreased, but remained in line with a fairly stable trend seen since mid-2012 (with Q4 2013 being an exception to this).

The number of companies entering administration decreased for the fourth consecutive quarter, and was 34.9% lower in Q2 2014 than the same period a year earlier. This was the lowest quarterly figure since Q1 2005.

Company voluntary arrangements and receiverships also decreased. The liquidation rate in the 12 months ending Q2 2014 was at its lowest level since data has been available to calculate the rate.