BusinessBusiness Recovery19% drop in corporate insolvencies in Q2 2010

19% drop in corporate insolvencies in Q2 2010

Corporate insolvencies fell 19.1% compared to a year earlier according to Insolvency Service figures, however, CVAs continue to increase

Corporate insolvencies continue its downward spiral as the latest figures
from the
Insolvency
Service
show a 19.1% decline in the second quarter of 2010, compared with
the same period a year ago.

There were 4,080 company liquidations, from 5,041 for the same quarter last
year. However, this is a 0.5% increase on Q1 2010.

Compulsory liquidations fell 9.9% to 1,169 in this quarter, compared to the
second quarter of 2009. Creditor voluntary liquidations fell to 2,911 equating
to a 18.3% decline in comparison with the same quarter last year.

Although receiverships and administrations continued to fall, company
voluntary arrangements (CVA) have increased.

There were 232 CVAs in Q1 2010 compared with 204 in the previous quarter and
157 in the same period last year.

There was a total of 1,311 receiverships, administrations and company
voluntary arrangements for the three months to August equating to a 14.3%
decline compared to the same quarter in 2009. This was made up of 302
receiverships, 777 administrations and 232 CVAs. Collectively this is a total
decrease of 14.3% compared to the same period last year.

However, companies can’t breathe a sigh of relief just yet. Brian Johnson, an
insolvency practitioner at HW Fisher, said when banks regain confidence they
will more “readily remove funding” on businesses they feel are not viable.

“We expect the number of corporate insolvencies to be far higher in the
fourth quarter and to continue rising into 2011,” he said.

His views were echoed by Malcom Shierson, partner in Grant Thornton’s
recovery and reorganisation division. Shierson said although administrations had
fallen for five consecutive quarters the impending VAT rise and the government’s
reduction in spending could see business failures increase.

Further reading:

ICAEW
sets up insolvency support for practitioners

Portsmouth
see off HMRC’s CVA appeal

Insolvency
stats: administrations continue to fall

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