Corporate Insolvencies in the third quarter 2012 fell by 21% on the same period 12 months ago.
The latest information released by the Insolvency Service discloses 986 insolvencies in the third quarter which are made up as follows:
- Administration Orders – 548
- Receiverships – 277
- Company Voluntary Arrangements – 161
The number of Creditors’ Voluntary Liquidations has also decreased although not at the same rate.
On the face of it, therefore, the continued decrease in the number of both corporate and personal insolvencies should be taken as a positive sign that the economy is on an upward trend.
However from our own experience, there still remain a large number of businesses that continue to trade because of historically low interest rates and accommodating attitudes from the banks and HM Revenue & Customs.
In previous recessions, the rate of insolvencies has only increased after the end of a recession when there are real signs of growth in the economy, when directors of distressed companies find it harder to fund growth through the banks and lose out to newer, leaner competition.
At the current time, there are signs that both trade creditors and the HM Revenue & Customs will provide every assistance in supporting a business going forward if it is based upon sound projections either through a Company Voluntary Arrangement or Administration Order.
In order for a Company Voluntary Arrangement to work, it is important for directors to take advice from their accountants and an Insolvency Practitioner as soon as they recognise there is a problem. Very often a 15 minute chat on the telephone or a meeting with an Insolvency Practitioner can be enough to put the basics of a business plan together and to begin the process of turning their business around.
Whether a Company Voluntary Arrangement, Administration or informal turnaround is required, Poppleton & Appleby have strong relationships with a number of finance and factoring companies and can assist in obtaining finance for businesses in need of refinance and possibly restructuring.