Insolvency rate to rise by 'catastrophic' amount

The insolvency rate for small businesses could rise by as much as 41%, compared with 2007, in the space of a year according to a poll by insolvency trade body R3.

R3 polled 2,073 of its members which have suggested that insolvencies are likely to reach the peak levels last seen in the 1992 recession the Financial Times reported.

The survey highlights the gloomy state that insolvency practitioners are forecasting but also noted the 'worrying trends in practices of securitisation of debt'. More than half of the respondents saw a growing number of lenders securing debt against individual homes.

Nick O'Reilly, president of R3, said: 'What we are seeing now is a large number of repeat inquiries from people that might have come to you months ago. That’s one indicator of why we are predicting an increase.'

'The battle for credit has been lost and there is no way out of what is coming. Businesses and individuals will now have to face up to today’s tougher climate and seek professional advice as early as possible' he added.

Further reading:

Insolvency rate to rise 41% by end of 2009

Insolvency body aims to beef-up council's powers