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
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
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
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies