Corporate Insolvencies See Large Fall

The number of companies falling into insolvency proceedings continued to fall in the second quarter of the year.  7,175 businesses entered some form of insolvency from April to June compared to 8,874 in same period last year, a fall of 19.1%.

The ‘Business Failures Report’ by credit reference agency Equifax also showed a 7% on insolvencies when compared with the opening quarter of this year.

The services sector was shown to have had the greatest number of insolvencies over the period, despite also seeing positive figures when compared with last year.  The sector still saw a 14% percent drop.  The most positive figures were to be found in the Transport and Communication sector, falling a huge 34%.

,The head of Equifax Commercial Information Solutions, Nic Beishon said "Our latest report appears to reflect the very close control businesses have been putting on cashflow and costs.

"Cuts in headcount and pay freezes have been key features of the last 12 to 18 months and these strategies certainly appear to be paying off in terms of slowing down the number of businesses going under.

"But we are not yet out of the woods – the actual number of businesses that have failed in the second quarter is not quite back to the levels of early 2008 – although in some cases they are pretty close."

He added, "Clearly we are now comparing performance with the worst part of the recession last year. So it is not surprising to see a significant improvement. But what I think is more useful is to compare this year’s figures with failures in the second quarter of 2008. "

Beishon explained that compared with the same period in 2008, this year’s figures saw a 12% increase, after just 6,409 insolvencies in that period.

He also added, "That’s still an increase but certainly a much smaller jump than in 2009 when failures in the second quarter hit 8,874."

Posted at 03:35PM Jul 12, 2010 by Marc Stenton in Insolvency  |  Comments[0]