The latest results Insolvency statistics from The Insolvency Service for Quarter 1 (January to March 2017) reveal that Company Insolvency numbers have gone down. The main findings of the report were:
- Total company insolvencies in Q1 2017 decreased compared with the unusually high level in the previous quarter, when a large number of connected personal service companies entered liquidation.
- Compared with last quarter’s underlying numbers, company insolvencies rose in Q1 2017 for the third successive quarter.
- Corporate insolvency numbers are not easily comparable to Q4 2016: insolvency numbers in that quarter were distorted by 1,796 connected companies entering insolvency procedures at the same time.
- Excluding these companies, corporate insolvencies rose 4.5% from Q4 2016 to Q1 2017 and are 5.3% higher than this time last year.
Commenting insolvency statistics Adrian Hyde, President of insolvency and restructuring trade body R3, says: “Having been flat last year and having fallen slowly from a post-financial crisis peak before that, corporate insolvency numbers are starting to move up again. Low interest rates, creditor forbearance, and a growing economy mean insolvency numbers are still close to record lows but the past year and a bit has been much more challenging for businesses.
“The pound’s fall in value since last year’s referendum will have hurt importers, while many of the currency hedges that protected larger companies in the immediate aftermath of the referendum will have begun to unwind at the start of the year. Other challenges include the introduction of the National Living Wage and the rollout of pension auto-enrolment to smaller firms. More obstacles lie in wait, too. The rates changes – despite some last minute alterations – could hurt businesses in London and the South East, for example.
“It’s worth noting, however, that insolvencies usually rise in the first three months of the calendar year as many companies come to the end of their financial year and have to make some difficult decisions.
“Insolvency numbers should be watched closely over the next year to see whether recent rises are just a blip or the start of a new upwards trend.”