UK200 Group predicts further corporate collapses

CORPORATE COLLAPSES are set to rise in 2012 due to poor Christmas sales, according to the UK200Group.

An insolvency expert at the professional service trade body UK200 Group believes corporate failures could soar next year as banks pull the plug on retailers.

Lawrence King, business recovery and insolvency manager at UK200 Group member firm Critchleys Chartered Accountants, said: "In the run up to Christmas we shall most likely see a decrease in corporate insolvency with the banks unwilling to "pull the plug" prior to the Christmas spending period and the January sales.

"However the banks will no doubt consider the Christmas sales figures when deciding whether to continue to support the high street."

Insolvency practitioners and directors might put off a entering into administration until the quarterly rent is paid. Unpaid quarterly rent is now a cost of the administration meaning it is prioritised ahead of creditors and practitioners - unless the payment is made before the insolvency process, in which case the landlord becomes a creditor.

"It is highly likely that directors and insolvency practitioners alike would hold off commencing insolvency procedures until we are into the new quarter cycle so as to make the next quarter's rent an unsecured claim rather than an expense of the insolvency procedure," King added.

The UK200 Group also believes bankruptcies will fall as other personal insolvency methods gain popularity.

Individual Voluntary Arrangements; where a practitioner consolidates an individual's debts then arranges and supervises repayment over a contracted period of time, have consistently increased in the last year.