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Insolvency Statistics Make Interesting Reading

08 February 2010

Final Court of 2009 Insovlency Statistics.

Last week (5th February 2010) was the release for the final court of 2009 of the insolvency statistics which show some surprising results and are a good indicator of the state of the economy.

On a corporate note the number of companies which entered into liquidation fell for the second quarter in a row with there being 4,566 liquidations making the total number of liquidations in England and Wales in 2009 19,077 companies;  there were 15,536 companies liquidated for the same period in 2008 and 12,427 companies in 2007.  The current figures equate to every 1 in a 114 companies being liquidated.

Personal bankruptcy statistics have shown a massive impact as the recession continues to bite.  Last year 134,142 people were made bankrupt or entered into insolvency agreements which equates to 1 in every 320 adults which is almost a 25% increase from 2008.

Debt Relief Orders which came into effect on 6 April 2009 have been growing in popularity throughout 2009 with 11,831 to 31 December 2009.  A Debt Relief Order is available as an alternative to bankruptcy where the debtor does not own their own home, the debtor has no more than £50 a month surplus income and assets (excluding a car) of not more than £300 and less than £15,000’s worth of debt.

Implications for Business

Ever since the period of discharge of bankruptcy has dropped from three years to one year under the Enterprise Act 2002, individual insolvencies have risen by almost 275%, with bankruptcy being seen as an easy option; rather than the thing to be avoided at all costs.  Consequently, businesses dealing with individual consumers need to be sure that they have very tight credit policies, because the chances of having customers going bust is becoming an increasing likelihood which needs to be faced up to. 

Businesses which trade with corporate customers need to be aware that although numbers of insolvencies have fallen on a quarterly basis for the last two quarters, the numbers are still high. 

The use of sensible credit policies and credit checking, including taking early advice in the cases of customers who have ‘gone quiet’ is essential. 

Developing an association with professional debt recovery staff such as our team can ensure that credit controllers have a trusted ally with which to make the best possible chance of making a full recovery. 

Should you require any advice on any of the points raised in this article or if you have any general debt recovery or insolvency queries please contact the team here at Chatham by emailing : debt@furleypage.co.uk or telephoning 01634 828277.

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