With the first quarter of 2012 behind us we look into how the insolvency market has performed based on the statistics recently released by corporate research specialists Hardman & Co.
Corporate Insolvency
The increase in corporate insolvencies for the first quarter of 2012 (512 more cases (+8.8%) than during the last quarter of 2011) was to be expected and reflects the normal seasonal upturn in the post Christmas period. However, the 6,316 new corporate insolvencies in the first quarter of 2012 was also a 4.2% increase on a year-on-year basis and follows three quarters in which numbers reduced quarter-on-quarter.
It is the fifth successive quarter that there has been an increase in corporate insolvencies on a year-on-year basis. However, the rate of growth has decreased in each of the last two quarters. The Insolvency Insights report released by Hardman & Co suggests this may be due to a “benign enforcement environment” which they believe may see the number of corporate insolvencies remain depressed.
Conclusion
It would seem that despite Britain’s slipping back into recession in the first quarter of this year, what Hardman & Co describe as a benign enforcement environment combined with low interest rates may enable many companies to survive in the near future, suppressing growth in the number of corporate insolvencies. However, the future is very uncertain and should interest rates increase or creditor support wain the industry could see a sharp rise in the number of corporate insolvencies.
We would urge the management of any company struggling to meet its liabilities to seek advice. The eventual failure of a business that has traded on in spite of insolvency can have repurcussions for the personal wealth and liberties of those involved in the management of them. Leathes Prior are non-appointment taking insolvency and restructuring specialists who offer advice to the management of struggling businesses with a view to protecting them against the pitfalls of trading in difficult circumstances.
