On 28th October 2016, The Insolvency Service released the insolvency statistics for the third quarter of 2016.
This is the first set of insolvency data to be released since the EU Referendum and whilst it’s still too early to draw any conclusions on the effect of the decision to Brexit upon the rate of insolvencies in the UK, a possible change in the overall trends may be emerging.
In respect of corporate insolvencies, the total number of appointments has increased slightly on the previous quarter as well as on the year. Of note was the 2,569 companies entering into creditors’ voluntary liquidation, an increase of 5.2% on the previous quarter and 2.2% higher than the same period in 2015. Administration were up by 3.5% on the previous quarter and 0.6% higher than a year ago, to 352.
“Whilst these latest statistics reflect an increase in the number of corporate insolvencies, it’s important to keep them in perspective;” says Stephen Wainwright, Partner “the current level of corporate insolvencies are far below those seen at the peak of the credit crunch and still less than historical norms.”
He continues “Given the Brexit decision and ongoing financial uncertainties, it wouldn’t be surprising to see a steady rise in corporate insolvencies over the coming years. That said, the emergence of new, innovative corporate finance as well as an apparent return to the market by more traditional lenders means that, as I speak, business conditions remain favourable for the well-managed business.”
Considering the latest statistics a little deeper, the liquidation rate in the 12 months to 30th September 2016 stood at 0.41% which is the lowest level since records began in 1984.
Whilst economic conditions remain relatively benign, it is always beneficial for directors to get professional advice as soon as they encounter a financial problem or disruption to their ability to carry on their business.