According to figures published last week by the Insolvency Service, the number of businesses forced into compulsory liquidation fell by 18.7 percent during the second quarter of the year, compared to the same period last year.
The latest figures have revealed that there were just over 1,000 compulsory liquidations, a drop of 13.9 percent on the first three months of 2012 and down on the same quarter of 2011, plus a sharp rise in compulsory voluntary arrangements (CVAs)
This means that in the twelve months ending in June 2012, approximately 1 in 142 active companies went into liquidation, which was similar to the previous year.
However, experts say that the fall is unlikely to continue, as the retail sector was the worst hit in the second quarter of this year and the construction industry has also been badly hit, with a 12 percent rise in the number of construction companies forced into compulsory liquidations compared to the drop across all other business sectors.
Construction and property firms also made up 23 percent of the total number of all businesses in England and Wales forced into compulsory liquidation.
Lee Manning President of R3, The Association of Business Recovery Professionals said: “To put it simply – there is no significant activity out there. While the drop in corporate insolvencies is to be welcomed, we could yet see a clear out of insolvent businesses, even in this atypical recession.”
For businesses who are concerned about the risk of insolvency or who are experiencing financial difficulties, our insolvency experts at Milsted Langdon can assist.
Our insolvency practitioners are able to offer advice and guidance surrounding various financial solutions, which are designed to help businesses and entrepreneurs from the insolvency route.
Tim Close is an accountant specialising in business insolvency, debt recovery and business rescue.