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Company liquidations have increased across England and Wales in the second quarter of 2008, reveal statistics from the government’s Insolvency Service.

Over 3,500 companies took compulsory and Creditor’s Voluntary Liquidations (CVLs) this quarter, an increase of 11.6 per cent on the previous quarter and an increase of 15 per cent on the same period a year ago.

Malcolm Cohen, partner in business restructuring at BDO Stoy Hayward, says the firm has seen a significant increase in its dealings with company insolvency over the past two months.

He adds: ‘The credit crunch hit the financial sector last year and is now filtering through to consumer spending. We expect to see an even sharper increase in companies requiring restructuring plans or becoming insolvent in the next quarter.

‘In order to make themselves more robust, companies need to ensure they don’t build up a large amount of credit. Also, with the market being so competitive they shouldn’t just be sitting around waiting for the phone to ring.’

Alan Tomlinson, partner at insolvency firm Tomlinsons, comments: ‘The upward trend in company liquidations was widely anticipated given the general economic slowdown affecting the owner managed business sector.

‘Increases in administrations are partly due to the same reason but also reflect government policy of administration being the preferred method of dealing with insolvency and the fostering of the rescue culture.’

However, a spokesperson for the government’s Insolvency Service says that despite figures showing an increase since last year, they are still currently only half the levels of insolvency reached in the early 90s.

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