Corporate Insolvencies Down In April

New figures published by Experian have shown that despite personal insolvency currently booming, corporate insolvencies have fallen considerably, seeing a 15% drop in April this year compared with the same period last year.

The fall meant that 1818 businesses fell victim to insolvency proceedings in April compared with 2274 in the same month in 2009.  This also meant that the insolvency rate for business fell for the month by 0.01%, the insolvency rate is a measured as a percentage of the entire UK business population entering some form of insolvency.

Greater London was the area that saw the highest number of business insolvencies, however even here saw a fairly substantial fall on the previous year.  The highest insolvency rate was seen in the North East at 0.13% compared with the national rate of 0.10%.  This is the third consecutive month in which the North East has had the worst rate.

Rolf Hickmann, managing director of pH, an Experian company, said,a “It continues to be vital for businesses to understand the circumstances of those they are doing business with and the risks they could expose their company to.

“It is easier for the smallest businesses to make adjustments to their operations and pull in the reins when times are challenging.”

The figures have also shown that the worst affected businesses in terms of size were the midsized ones.  Companies with 26-50, 51-100 and 101-500 employees all saw rates well above 0.20% at 0.22%, 0.26% and 0.24% respectively.

Hickmann also added, “For the largest business, there is the flexibility that comes with economies of scale, so insolvency rates among these extremes of business type are also low. Mid-sized businesses do not typically have the luxury of either of these benefits and can face the most pressure.”

Meanwhile, Mike Jervis, business recovery services partner at PricewaterhouseCoopers, has said, “If there is uncertainty and the possibility of some return to confidence to business then companies are able to hold on a bit longer.

“Hopefully we are now in an environment where some confidence can be restored.”

Posted at 02:52PM May 14, 2010 by Marc Stenton in Insolvency  |  Comments[0]