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Monday 21st of December 2009
October 17, 2009    

Ongoing credit crunch forces unnecessary bankruptcies

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by David Masters
Ongoing credit crunch forces unnecessary bankruptcies

Potentially successful businesses are being forced into bankruptcy because they can’t get access to credit, an industry expert has claimed.

Commenting on research by UHY Hacker Young and Trowers & Hamlins that found a rising number of firms facing financial difficulties, David Molian, lecturer in entrepreneurship at the Cranfield School of Management, said restrictions on lending were to blame.

“I think those businesses which are now going under have been fighting to get in every last penny and protect every last penny and now there is no more cash,” he said.

“That is probably what explains the rise in the number of businesses going bust.”

Molian called on the government to do “everything it can” to increase the flow of credit and prevent further insolvencies.

In related news, a study by the Institute of Chartered Accountants in England and Wales found more than a third of firms claim that access to capital is more difficult than it was 12 months ago.

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