Company insolvency rate rises in Q3 2016

Published on November 11, 2016 by Crawfords Accounting

The company insolvency rate in Q3 2016 was slightly higher than in the previous quarter and over the previous year, according to newly published figures from the Insolvency Service.

Data for the period from July to September was published at the end of October, showing an increase in the company insolvency rate and a fifth consecutive quarterly increase in personal insolvency, driven by a rise in IVAs.

In Q3, 3,633 company insolvencies were recorded, representing an increase of 2.2% over the previous quarter and 1.1% over Q3 2015.

But the Insolvency Service adds that the past year has seen company insolvencies stay fairly flat, off the back of a steady decrease since mid-2011.

The overall pattern of corporate insolvency has been downwards since the peak of 2008-09, when the recession was at its worst with over 6,000 insolvencies per quarter.

From Q3 2009 there was a steep decrease in corporate insolvency, which levelled out towards the end of 2010 at just under 5,000 per quarter.

A slight increase in 2011 took the quarterly totals back over 5,000 corporate insolvencies, but this level has not been seen from 2012 onwards.

The total for Q3 was driven by a rise in creditors’ voluntary liquidations, up 5.2% over the previous quarter to 2,569, while compulsory liquidations fell 4.5% to 632.

Both of these figures are higher than in Q3 2015 – by 2.2% and 2.4% respectively – although again the trend has been quite flat over the past year or two.

Just over 350 firms entered administration, up 3.5% quarterly but only 0.6% annually, while 75 entered into company voluntary arrangements and five went into receivership.

The slight upturn in corporate insolvencies is a concern for any companies operating close to their financial limits already – if you are worried about your future viability, we would urge you to seek prompt administration advice for the best chance to turn things around.

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