Downturn hits home as bankruptcies hit new high
Figures from the Insolvency Service have published some alarming news after it reported that company failures and personal bankruptcy has reached a record high for England and Wales.
In the last three months of 2008, there were 2,428 corporate insolvencies such as administrations and receiverships, according to the Insolvency Service. This represented an increase of 220% compared with the same period in 2007.
During the same three month period, 29,444 people were made bankrupt or entered an individual voluntary arrangement (IVA), up 18.5% compared with a year ago.
For 2008 as a whole, the number of firms that were liquidated increased by 24% to 15,535 – this equates to one in every 150 trading companies.
Alan Tomlinson of Tomlinsons, a licensed insolvency practitioner, told the BBC he had never seen so many companies go bust in his 25 years as an insolvency practitioner.
Mr Tomlinson describes current trading conditions as ‘tough’ and the situation could get worse before it gets better.
The number of other corporate insolvencies (receiverships, administrations and company voluntary arrangements) also experienced a vast increase of 92% to 6,276.
Pat Boyden, an insolvency expert at accountants PwC, believes bankruptcies will rise throughout 2009 since it is now more difficult to arrange an IVA, so those on the brink of insolvency are likely to go directly into bankruptcy.