Corporate insolvency figures are dropping

Posted 04/11/2014

The business world is experiencing fewer and fewer corporate insolvencies, according to statistics that have recently been released by the Insolvency Service.  The figures for the third quarter of 2014 show a drop in corporate insolvency of about 11% when compared with figures for the third quarter of 2013.  This echoes a long term trend away from formal corporate insolvency and towards greater flexibility for businesses in the way that they interact with their creditors when times are tough. 

Commenting on the statistics, Giles Frampton, President of the Association of Business Recovery Professionals (R3) said “the long term corporate insolvency trend is downwards and activity has been very quiet recently.  However it is encouraging to see relatively greater use of business rescue procedures – rather than liquidations – in the last quarter following recent falls”.

Although these statistics suggest that the economy is improving, it is accepted within the insolvency profession that decreasing corporate insolvencies do not necessarily go hand in hand with sustained economic growth.  It is common for business insolvency to increase as the economy grows because businesses who are over-geared are unable to obtain capital to invest in their business to meet the demands of a growing market. 

Robert Tiffen, Associate at Ashtons Legal said “In our experience we would expect to have seen much more insolvency work given the growth occurring through the economy.  Our view is that there are a number of businesses in the market place who are probably still vulnerable but whereas in the past the creditor most likely to force an insolvency on them would be the bank, banks simply aren’t able to do that in the current climate”.

Ashtons Legal’s highly experienced multi-disciplinary team regularly advises on all aspects of insolvency related work and is routinely instructed by some of the leading insolvency practitioners across the region. We have particular experience of corporate transactions in an insolvency context which includes complex property and employment support. Our disputes team has experience of the full range of insolvency related disputes work, from retention of title claims to detailed arguments about the interaction between property and insolvency law.

For individual advice, please contact Robert Tiffen on 0330 404 0773.