Business failures decreasing but personal insolvencies still high

The number of companies going out of business in England and Wales fell dramatically last year, according to figures from the Insolvency Service

A total of 4,905 businesses went into receivership or administration, or entered into company voluntary arrangements in 2010. That was a fall of 23% on 2009, which was the record year for company insolvencies.

There was also a drop in the number of company liquidations at the end of the insolvency process. There was a total of 16,045 – a fall of 16% compared with 2009.

The decrease is put down to the slight improvement in the economy as it eased out of recession.

However, the Insolvency Service says the number of personal insolvencies remains alarmingly high.

There were 135,089 people declared insolvent in 2010. That was an increase of 0.7% on 2009 and the highest figure since records began in 1960. The figures included a 6.5% increase in Individual Voluntary Arrangements.

The Insolvency Service says that men still make up the majority of bankrupts, accounting for 60% in 2009. However, the number of women bankrupts is growing – rising from 29% in 2000 to 40% in 2009.

The take-up of Debt Relief Orders has been significant with 30,838 using them between April 2009, when they were first introduced, and September 2010.

It’s feared that rising unemployment and the increasing cost of credit could make 2011 even more difficult for both businesses and individuals struggling with debt.

Businesses need to ensure they stay on top of their credit control to ensure they maintain cash flow and keep bad debts to a minimum.

Please contact us if you would like more information about debt collection and credit controls issues.