Official statistics have revealed a surprise fall in the number of business failures in the second quarter of the year. The number of companies going into liquidation has reduced by round 3.6% on last quarter and by 2.4% on the same period last year. There has also been a reduction in the number of companies going into receivership and into administration.
The number of Company Voluntary Arrangements (CVAs) increased significantly, rising by around one-third after adjusting the figures for a large group of inter-connected companies that entered into CVAs during the period.
Licensed Insolvency Practitioner Paul Moorhead, of Rotherham-based debt advice firm Moorhead Savage, commented on the latest figures:
“This decrease in the number of liquidations, receiverships and administrations is good news for the economy. The figures may be a surprise to many people, who see a steady stream of bad news in the media about the state of the economy.
“One reason for the decrease appears to be a softening of the stance taken by many creditors. Rather than forcing businesses into liquidation, they appear to be less inclined to force companies to be wound up if they can’t pay their bills. Instead, we have seen an increase in the number of CVAs, where creditors agree to a formal repayment plan which may include writing off some debt, and a reduction in the number of creditors who ask the courts to wind up cash-strapped businesses.
“It is a bit of a rollercoaster ride at the moment. Whilst the official statistics show a decrease in the number of company failures, we have seen a steady increase in the number of enquiries for our help. The summer holidays, plus events like the Olympics and Jubilee celebrations earlier in the year has been a boost to many businesses but has had a detrimental impact on others, and we will have to wait and see whether the rest of the year brings a further decrease in the number of struggling firms.”
Paul and his team can be contacted on 01709 331300 or by email: firstname.lastname@example.org