Friday, February 28, 2014

News: Fall in insolvencies shows signs of recovery says Rotherham expert

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Rotherham insolvency expert Paul Moorhead says a fall in the number of businesses facing failure shows the economy is finally starting to show signs of recovery.

The latest official statistics provide further evidence of an upturn in the economy as the number of insolvencies in England and Wales decreased overall last year.

The figures reveal that there has been a drop in the number of companies going into liquidation – the most common type of insolvency procedure for companies that have run out of cash.

Overall, 14,982 companies were wound up in 2013, a decrease of 7.3 per cent on 2012.

Of these, 3,624 were compulsory liquidations resulting from court orders and 11,358 were creditors' voluntary liquidations that are instigated by company directors.

Other types of company insolvencies also fell during 2013, with the total number of receiverships, administrations and company voluntary arrangements (CVAs) falling by 16 per cent to 3,859.

"The decrease in the number of insolvencies is good news for the economy," said Paul, the founder of insolvency practice Moorhead Savage in Rotherham and the 2013 Corporate Insolvency Practitioner of the Year.

"Whenever a company goes bust, it causes misery for creditors, suppliers, customers, employees and, of course, the owners of the business, so any reduction is welcome.

"However, it is worth pointing out that the big drop in the number of liquidations seems to have been mainly due to a sharp fall in the number of compulsory liquidations – where a creditor forces a company to be wound up through the courts due to unpaid bills.

"It is hard to know the reasons for this decrease but the relatively high cost to the creditor could be a factor.

"Meanwhile, the number of liquidations caused by directors deciding to close the doors decreased by only 4.5 per cent during the year and the rate of decrease seemed to be slowing by the end of 2013."

Moorhead Savage website

Images: Moorhead Savage

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