Economy showing signs of recovery with business insolvency numbers down

A new report from FA Simms & Partners has found that business insolvency figures are still experiencing a continued drop since the end of the recession.

The Q2 2015 Insolvency Statistics Review revealed that only one in 207 active companies entered a formal liquidation process in the 12 months ending Q2 2015.

The total number of companies that entered a formal liquidation process in Q2 2015 was 3,908 – a 7.5 per cent decline compared to the figures released during the same quarter in 2014.

The majority of this decline derived from the reduced number of Compulsory Liquidations with 21.9 per cent fewer reported in Q2 2015 compared with the same quarter in 2014.

Richard Simms, managing director, FA Simms & Partners, said: “Late payments to SMEs has been a key topic of conversation recently as it has been highlighted that SMEs are struggling to get their larger suppliers to pay them on time.

“With this issue being brought to people’s attention in the media it may be having an effect on creditors issuing winding-up petitions as they recognise that the companies they are waiting on payments from are also waiting on payment from their own suppliers.

“This theory would support the significant drop in Compulsory Liquidations.”

The report also showed a drop in personal insolvency figures. In the 12 months ending Q2 2015, just one-in-523 adults (0.19 per cent of the adult population) became insolvent.

This is the lowest figure since the 12 months ending Q1 2006 and supports a continued decline in these figures.

New figures from The Insolvency Service also underpin this view with the number of people being declared insolvent across the UK falling to its lowest level for almost a decade.

The body said 18,866 individuals became insolvent in England and Wales in Q2 2015.

Philip Sykes, president, R3, the insolvency trade body, said: “It has taken a long time, but with wages outstripping inflation again, people are finding it easier to repay their debts without resorting to insolvency procedures.”

Date published 7 Aug 2015 | Last updated 7 Aug 2015