Many firms in East ‘still at risk’ despite fall in insolvency numbers, says R3
- Credit: Archant
Many businesses in the East of England remain at risk, despite figures showing a nation-wide fall in the number of corporate failures last year, an insolvency expert in the region has warned.
According to figures from the Insolvency Service, 1,790 administrations were recorded in England and Wales during 2014, a fall of 24.3% compared with the previous year and the lowest total since 2004.
A total of 14,040 companies were liquidated during 2014, the lowest figure since 2007. However, while voluntary liquidations fell by 9.3% compared with 2013 to 10,302, compulsory liquidations grew 2.9% to 3,738.
With the number of receiverships and company voluntary arrangements all falling, by 21.1% and 2.4% respectively, the total number of corporate insolvencies last year fell by 9.2% compared with 2013 to 17,117.
Frank Brumby, eastern region chairman of R3, the trade body for insolvency practitioners, said: “Although corporate insolvency has fallen over 2014, it’s notable that compulsory liquidations have risen slightly. This may be a sign that creditors may be becoming less lenient towards debtors than they have been since the financial crisis.”
Mr Brumby acknowledged that, overall, low interest rates and the fall in inflation were combining to help keep corporate insolvency numbers low. “The number of companies going through an insolvency process is almost down to pre-financial crisis levels, although it’s taken seven years to get to this point,” he said.
However, he added: “In the short-term, the first quarter of the year often sees an increase in insolvencies as companies whose Christmas revenues failed to meet expectations consider their options. After that, market changes and economic uncertainty caused by election results here and, in particular, abroad could also have an effect.
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“How big an impact eventual interest rate rises will have on businesses remains unknown. Although initial rate rises are likely to be very small, there are many businesses already at their financial limits.”