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Insolvencies set to peak

Jan 29 2010

Company liquidations are set to rise despite the UK economy moving out of recession, claim insolvency experts.

Insolvencies will peak in 2010 at around 28,000, claims a poll of 365 insolvency practitioners from industry body R3. The situation is expected to only improve marginally in 2011 with liquidations dropping to 27,000.

President of R3, Peter Sargent, says: ‘We expect insolvencies to peak during the next two financial years. As widely anticipated, the GDP estimates for the fourth quarter of 2009 have confirmed that the UK has emerged from technical recession after the longest period of negative growth in more than 50 years.

‘While this represents a small positive step, the risk of a double-dip recession remains a real threat and sadly confirms that for many businesses a true economic recovery remains uncertain.’

Figures from the 1980s and 1990s recessions show that the peak in both personal and corporate insolvencies occurred after the return to growth.

According to a survey from the Insolvency Service, there were 4,716 compulsory liquidations in the third quarter of 2009.

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