Company failures down 13 per cent on Q1 2010
17 March 2011
London, 17 March 2011. The
rate of company failures has continued to slow during the first
quarter of 2011, down 1.4 per cent on Q4 2010 according to the
Graydon Insolvency Predictor, based on data from commercial credit
reference agency Graydon UK published today.
The number of corporate insolvencies is expected to fall by 12.7
per cent compared to the first quarter of 2010 according to
Graydon's index, but will be up 8.2 per cent on the number of
company failures recorded in Q1 of 2008 when the effects of the
economic downturn had not yet been realized.
Martin Williams, Head of External Communications at Graydon UK
commented: "The residual impact of the financial crisis is still
being felt keenly, with the number of company failures still
considerably higher than they were in 2008, prior to the onset of
the downturn."
"We are now beginning to see green shoots, with both Bovis Homes
and Persimmon reporting an increase in profits and sales activity
in recent weeks to indicate a recovery in the construction sector,
a traditional pointer of better prospects for the economy at large.
The Government spending cuts have not yet begun to bite
however."
Martin Williams says that in addition to public spending cuts, the
impact of January's VAT increase and the speculation about the Bank
of England raising interest rates will mean that non-essential
retailers are likely to be most at risk as consumer confidence and
spending power both decline.
According to the index, compulsory liquidations in 2011 Q1 will
continue the downward trend seen in 2010, indicating that creditors
are looking for alternative ways to recover their debts, for
example through creditor voluntary arrangements or rescheduling
repayments.
Martin Williams adds: "When it comes to the threat of insolvency
action, struggling businesses appear to be benefitting in two
distinctly different ways; on the one hand, they are being offered
some respite from the threat of compulsory liquidation as creditors
consider other options for recouping money owed to them, while
HMRC's "Time to Pay" scheme continues to provide breathing space to
company directors hoping to avoid entering into Creditors Voluntary
Liquidation. The combination of these two factors is continuing to
drive insolvency numbers down."
