Daily News
Company Administrations To Continue At Record Level For At Least 12 Months
2009 saw a record number of company administrations, with a total of 4,161 companies being placed in administration in England and Wales last year. This is an 1.7% increase compared to the 4,092 company administrations recorded in the year 2008*.
"There is no light at the end of the tunnel for troubled companies that are relying on a fast economic recovery to help them repair their balance sheets. Even though recent figures technically signal the end of the recession the growth was minimal and, so far, the recovery is too slow to reverse the damage,” said Joe McLean, head of Grant Thornton’s recovery and reorganisation practice in Newcastle.
“The risk of the double dip recession remains real and should not yet be discounted. Sadly, we cannot expect the number of administrations to drop significantly below its historic highs until Britain's economic output far outgrows its pre-crisis levels.”
The number of troubled companies dropped by 13% last quarter with 849 companies being placed into administration in England and Wales in the fourth quarter of 2009 (974 in Q3 2009), according to statistics released today by the Government's Insolvency Service. The latest quarter also represents a drop of 34% on the fourth quarter of 2008, when 1,290* administrations were recorded.
Meanwhile, company liquidations in England and Wales dropped by 2% to a total of 4,566 in the fourth quarter of 2009 compared to the previous quarter, when 4,648 liquidations were recorded (Q3 2009). This represents a 1% decrease on the same period the previous year, when 4,615 liquidations were recorded (Q4 2008).
"There has been a drop in the number of business failures in Q4 compared to the previous quarter and compared to the same period in 2008. While this is good news, the number continues to be near a historic high and we expect the number of liquidations to shoot up even further when the future government stops extending the 'Time to Pay' Tax scheme," said McLean.
"The poor health of the UK economy is mainly reflected in the persistently high number of administrations. Typically large employers are placed in administration when they run into trouble, whereas liquidations are more common among smaller enterprises. There is as yet, little sign of liquidity returning to the banking sector, and that will be key to any return to normality," concluded McLean.
*The figure for Q4 2008 has been adjusted to reflect the one-off appointment of an insolvency practitioner over 729 separate managed service companies.