Insolvencies continue to soar

Almost 5,000 companies in England and Wales hit the wall in the first three months of the year while personal insolvency nearly hit a record high, figures from the government's Insolvency Service reveal.

This is a 44% increase in company liquidations from the same period a year ago.

Richard Fleming, head of restructuring at KPMG, says: "Unfortunately we are seeing companies with nowhere else to go failing as their backers, realising that they are throwing good money after bad, snap the purse closed.”

Meanwhile, personal insolvencies also jumped during the first three months, with 19,062 people entering into bankruptcy, up 23.4%. Individual Voluntary Arrangements (IVAs) were up 11.8% from the same period in 2008.

Stephen Speed, chief executive of the Insolvency Service, says the sharp rise in company insolvencies reflects the impact of the recession on business. “It is vital that any person or any company concerned about their financial position should seek advice as early as possible. Insolvency can often be avoided entirely by taking early action,"  he adds.

Experts expect the number of both company and personal insolvencies to continue to rocket.

Mike Gerrard, a personal insolvency partner at Grant Thornton, says: "The personal insolvency figures indicate the growing difficulty facing UK households trying hard to juggle their debt whilst trying to remain employed during the downturn.”

Related articles