Administrations, receiverships and CVAs up 220%

The Insolvency Service has announced a massive upsurge in business collapses as the effects of the credit crunch rock UK businesses to an even greater extent.

The government department said that there were 2,428 corporate insolvencies made up of 2018 administrations, 261 receiverships, and 149 company voluntary arrangements on a non-seasonally adjusted basis.

This represented an increase of 220.3% on the same period a year ago.

There were also 4,607 liquidations in the fourth quarter of 2008 on a seasonally adjusted basis. Breakdowns showed 1,562 compulsory liquidations, 34.4% on Q4 2007 and 3,045 creditors voluntary liquidations, 62.2% up on the same period.

PricewaterhouseCoopers said a total of 6224 businesses across England and Wales officially entered into insolvency in Q4 2008, a surge of 69% on the last three months of 2007.

Mike Jervis, partner in the firm's business recovery services practice said: 'We predicted in the last quarter that the small decrease in figures would be the calm before the storm.

'A 69% increase on the same period last year shows that the lack of confidence and capital is now impacting a much broader range of the economy than we have experienced to date, demonstrating also the speed at which companies are now filing for insolvency.'

PwC has also seen an increase in case load across a broader range of sectors, which Jervis said demonstrated how corporate insolvencies appeared to be 'very much to be endemic across the board.'

Robin Knight, head of business development at Zolfo Cooper said: 'The increase in company insolvencies is the harsh reality of the current economic situation and confirmation of what we already thought.

Now that we are officially in a recession, it is inevitable that there will be a further rise in insolvencies over the coming year and very possibly beyond.

Knight predicted that pubs and restaurants will find themselves under the cosh as consumers tighten their belts further.

Geoff Carton-Kelly, Partner, Baker Tilly Restructuring and Recovery said: 'While many businesses can cope with a small reduction in custom, the massive falls currently being experienced are causing serious damage.

'Certainly, 2009 will go down as a bleak year in history for mid-market companies - things will get worse for them before they get better.'

Alan Tomlinson, of insolvency practitioners Tomlinsons, which helps out the smaller companies which form the bedrock of the UK economy said: 'I have never seen so many companies, from all sectors, going to the wall.

Trading conditions have never been so tough and given the bleak economic outlook it could be some time yet before they begin to improve.

"Liquidations in the fourth quarter of 2008 were dramatically up on liquidations in the same quarter of the previous year. It is the small and medium-sized business, which forms the backbone of the UK economy, that has suffered the most and I expect this situation to deteriorate even further in 2009.'