Baker Tilly responds to latest personal and corporate insolvency figures

According to the latest figures from the Insolvency Service, there were 24,282 individual insolvencies in England and Wales in the fourth quarter of 2013.

This was a decrease of 4.6 per cent on the same period in 2012.

This was made up of 5,386 bankruptcies (which were down 22.2 per cent on the corresponding quarter of the previous year), 6,563 Debt Relief Orders (DROs) (down 13.1 per cent over the same period) and 12,333 Individual Voluntary Arrangements (IVAs) (up 12.3 per cent over the same period).

In total, there were 101,049 individual insolvencies in calendar year 2013 – the lowest level since 2005.

Commenting on the personal insolvency statistics, Mark Sands, personal insolvency partner at Baker Tilly, said:

“With the lowest number of personal insolvencies for eight years, the good news is that we’re back to pre-crash levels and we expect this to signal some stability going forward.

“However, our own figures indicate that there continues to be a significant north-south divide with London registering only 15 personal insolvencies per 10,000 people, while the North East is double that figure at 30.

“There’s also a danger that low interest rates and increasing consumer confidence may tempt some to borrow more than they can afford to repay, so we might not be quite out of the woods yet.”

The Insolvency Service’s corporate insolvency statistics showed there were 3,552 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the fourth quarter of 2013 (on a seasonally adjusted basis). This was a decrease of 7.4 per cent on the previous quarter, and 7.1 per cent less than the same quarter in 2012.

Additionally, there were 1,001 other corporate insolvencies in the fourth quarter of 2013 (not seasonally adjusted) comprising 236 receiverships, 642 administrations and 123 company voluntary arrangements (CVAs). In total these represented a decrease of 0.6% on the same period in 2012.

Commenting on today’s corporate insolvency statistics, Graham Bushby, Baker Tilly’s head of restructuring and recovery, said:

“The latest figures from the Insolvency Service show a welcome decline in corporate insolvencies in the last quarter.

“Our own figures suggest that there has been a widespread improvement across a number of sectors with a particularly significant decline in the failure rate of construction businesses compared to the same period last year.

“However, the numbers don’t really paint a true picture of UK corporate health. Recent research from the Bank of England suggests that 14 per cent of banks’ lending to SMEs is subject to some kind of forbearance – whether in the form of loan term extensions, payment holidays, or transfers to interest only deals, so there is clearly a significant degree of distress still being felt by some businesses, despite the recent upturn in the economy.”

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