Corporate insolvencies have continued to fall from their 2009 peak, according to the latest insolvency statistics published by the Insolvency Service.
In the third quarter of 2015, there were 3,539 new company insolvencies, compared to 3,701 in the second quarter, and 3,940 in the third quarter of 2014.
There was also good news for the insurance industry, with the figures revealing there were half as many insurance company insolvencies in the first six months of 2015 as there were in the same six months of 2014.
Between January and the end of June, there were six insurance company insolvencies. There were 12 insolvencies in the comparable period in 2014.
Commenting on the statistics, Phillip Sykes, president of R3, the insolvency trade body, said, “The numbers of corporate insolvencies continue their long and slow decline since their peak in the recession. Although this week’s growth figures show businesses aren’t exactly flying, not too many are really struggling either.”
“The unique conditions of this recovery – low interest rates and creditor forbearance – meant we never saw the traditional post-recession spike in corporate insolvencies. The circumstances of this recovery have also given businesses the space and time needed to restructure themselves outside of the formal insolvency process. The current low levels of inflation, lack of pressure for wage increases and the strong pound helping importers, may also be assisting businesses at the moment.”
“According to R3’s most recent membership survey, the most common recent causes of business struggles have been the underperformance of particular products, the failure of long-term business strategy, or a mistake by the business. At the moment, it is more likely that businesses are causing their own problems rather than any particular economy-wide headwind.”
“One such headwind could be an interest rate rise, although the timing of this keeps moving beyond the horizon. R3’s last Business Distress Index found one-in-five businesses saying an interest rate rise could cause them to struggle. The other 80% may not be affected directly, but they should think about how a rise will affect consumers as this will have a knock-on effect on them.”
“Easier access to non-traditional finance for businesses may be helping to keep the number of insolvencies down. While the banks are open to lending they remain cautious, but there are many other types of funding available. Peer-to-peer lenders and venture capitalists are keen to lend as they can see better rates of return than from traditional investments.”