Fall in Corporate Insolvencies

There continues to be less corporate insolvencies than previously expected, with 33 per cent fewer recorded during July than the year before, according to Experian.

There continues to be less corporate insolvencies than expected, with 33 per cent fewer recorded during July than the year before, according to Experian.

According to the firm 1,542 UK businesses failed last month, compared to 2,312 insolvencies recorded in July 2009. This equates to an insolvency rate of 0.08 per cent of the business population in July 2009, compared to 0.12 per cent the year before.

Max Firth, managing principal of pH, an Experian company, said, “July’s data indicates that the SME population is faring much better in terms of insolvencies than it did this time last year, however, increasing failures at the top end of the market demonstrates clearly that there is a still a great deal of uncertainty.

"Given this ever changing picture, it is vital that organisations ensure they understand and proactively manage the risk that those they do business with exposes them to.”

All regions saw year-on-year falls in insolvency rates, with Scotland overtaking the South East as the region with the lowest rate of insolvencies.

The North East, which has been particularly exposed to the downturn due to its manufacturing community, and Wales saw the biggest improvements with insolvency rates halving over the last year. Just 0.09 per cent of businesses in the North East failed in July 2010, compared to 0.17 per cent in July 2009, while Wales saw rates decline from 0.14 per cent to 0.07 per cent.

The improvements in the North East meant that it is no longer the worst performing region. Greater London continues to be the region where businesses had the lowest financial strength score at 79.75.

The financial strength of firms in the leisure and hotel industry rose from 77.95 in July 2009 to 78.97, the biggest improvement of any sector. However, this sector has recently been stricken by the rash of tour operators toppling in August. Holiday firms Goldtrail, Sun4U and Kiss Travel have all recently collapsed which will affect Experian's rating for August.

The largest companies, those with 501 or more employees, was the only size business to see an annual increase, with the insolvency rate leaping to 0.17 per cent from 0.11 per cent in 2009. 

At 80.93, the financial strength score of UK businesses in July was marginally higher than the 80.61 recorded in July 2009, and up slightly on June 2010 (80.83). However, it remains down on the 12 month high of 81.37 recorded in December 2009.

Posted at 03:46PM Aug 20, 2010 by Marc Stenton in Insolvency  |  Comments[0]