Statistics from The Insolvency Service also show that corporate insolvencies reached 1,529 in the second quarter of 2009 in a 22.7 per cent increase on the same period last year.
The Corporate Restructure team at Enable Finance is not surprised by these figures as we are currently in the deepest recession since the Second World War.
There were 5,055 compulsory liquidations and creditors’ voluntary liquidations in England and Wales in the second quarter of 2009, a rise of 2.9 per cent on the previous three months and a 39.1 per cent increase on the same period in 2008. Corporate liquidations comprised 1,457 compulsory liquidations, which are down 6.8 per cent on the previous quarter, and 3,598 creditors voluntary liquidations, which were up 7.4 per cent on the previous three months but a massive 56.8 per cent from a year ago.
While all business failures are traumatic and a real loss to the economy as a whole it would be interesting to see what percentage of businesses restarted having learnt from their mistakes.
A spokesperson for the Association of British Insurers said: “The latest insolvency figures are alarming. They are particularly bad news for suppliers who are unsecured creditors, as it’s likely they will herald an increasing number of pre-packaged administrations, in a year which has already seen a record number.” further highlighting the need for Bad Debt Protection Insurance.
In response to the above statement Corporate Recovery experts commented that a long term view must be taken as often businesses that restart again using a pre pack administration as the vehicle to purchase the assets of the old Company often go on employing staff and creating wealth for the economy in the long term.