Second quarter dip in bankruptcies
Aug 09 2010
“Many CEOs still walk a fine line to avoid bankruptcy”
The number of UK businesses declared insolvent decreased by 19.1 per cent in the second quarter of 2010 compared to the same period last year.
There were 4,080 compulsory liquidations in the second quarter of this year, a slight increase on the first quarter, in addition to 1,311 other corporate insolvencies including receiverships and voluntary arrangements.
Carl Jackson, head of recovery at accountancy firm RSM Tenon, comments: ‘Businesses are still continuing to struggle with cash flow. Many are already in the danger-zone but have been propped up by initiatives such as HMRC’s Time to Pay Scheme.
‘The fate of businesses now lies in the ability of the management and the implementation of phasing out these initiatives, combined with a rise in liquidity from increased lending from banks. An immediate withdrawal will leave businesses in a worse position than they were in during 2008.’
Voluntary arrangements in which a company agrees to a payment schedule with the creditor instead of being declared bankrupt increased by 47.8 per cent on the second quarter of 2009.
The number of personal insolvencies fell by 3 per cent on the first quarter. An average of 380 individuals per day entered into insolvency in the second quarter of this year, the highest figure ever recorded for a second quarter period.