Business hit by wave of receiverships
Business failures in Britain are set to soar to 17,000 this year.
Government statistics for the first six months of 2008 show them rising by a staggering third over last year’s total of 12,507. And some of Britain’s most well-established companies are among the earliest victims. Those going into receivership, having traded for at least five years, have the biggest surge in failures, up by 130 per cent.
But there’s much worse to come, insolvency experts warn. Figures for the 1990s showed company failures do not seriously escalate until a recession gets into its second and third year. Danny Allen, head of InsolvencyInfo, the UK’s only independent resource agency for Britain ’s 1,700 licensed insolvency practitioners said: “There were 3,560 insolvent liquidations in the second quarter of 2008, an 11.6 per cent increase on the number of going out of business in the first three months of the year.”
Ian Jones, a partner in the Manchester-based insolvency practice JLD, said: “The number of failing businesses we have been asked to deal jumped from five in July 2007 to 15 in July this year.”
The erosion of Britain’s business base is accelerating, with quarterly figures for liquidations up 15 per cent on the same three months of 2007.
“If this trend continues over the next six months we will see an annual figure of nearly 17,000 insolvent liquidations – a big increase on 2007’s total of 12,507,” Allen said.
Allen, who handled 400 business failures in his eight years as an insolvency practitioner, added: “Few business owners throw in the towel straight away. But, as companies struggle against the tide, they reach a point where they simply can’t carry on.” JLD’s Jones said: “Our recent three-fold increase could easily go to four- or five-fold.”
Receiverships – effectively banned by a streamlining of the Enterprise Act in 2002, and now only available to secured creditors who took a charge over assets before 2003 – are up from 77 in the second quarter of 2007 to 177 in the same three months this year.