The number of company insolvencies increased by almost a fifth (19.3 per cent) in the third quarter (Q3 2018), compared with the same quarter in 2017. This was driven by a rise in underlying creditors’ voluntary liquidations which increased to their highest level since Q1 2012.
According to data from the Insolvency Service, a total of 4,308 companies entered insolvency in Q3 2018, consisting of 3,083 creditors’ voluntary liquidations (71.6 per cent of all insolvencies), 741 compulsory liquidations (17.2 per cent) and 484 other insolvencies (11.2 per cent).
Total underlying company insolvencies increased by 8.9 per cent compared to Q2 2018. When compared to the same quarter last year, the underlying number of company insolvencies increased by 19.3 per cent.
Duncan Swift, Vice President of insolvency and restructuring trade body R3, says: “This is the first time we’ve seen more than 4,000 corporate insolvencies in one quarter since the start of 2014. So far, 2018 has been a tough year for English and Welsh businesses, with insolvency numbers much higher in every quarter than in the same period last year.”
The construction industry endured the highest number of insolvencies in the 12 months ending in Q3, followed by the wholesale and retail trade and the vehicle repair sector.
Commenting on the figures, a separate spokesperson says: “The six-year high in creditors’ voluntary liquidations could send a bleak message to markets.
“Not only are banks getting more assertive, but in the current economic climate, many companies are deciding to simply shut up shop rather than see it out.
“Many sectors, not least retail, are evolving at such a pace that legacy companies are simply being left behind and are calling it a day. The long hot summer certainly didn’t help.”
There are many underlying reasons why companies may fall into administration or insolvency. If you have any concerns about your business then it is beneficial to fully understand the possibilities for restructuring as early as possible to allow for appropriate planning.
The experts at our partner business, BM Advisory, will be happy to talk through the possibilities with you.
Please contact Mike Solomons or Andy Pear or your usual Beavis Morgan partner.