Insolvency profession helps rescue two-in-five insolvent businesses and 230,000 jobs
The UK’s insolvency profession helped rescue approximately two-in-five insolvent businesses in 2013-14, according to research by ComRes and R3, the insolvency trade body.
The research found that R3 members helped around 6,700 businesses (41% of formal insolvencies) continue trading in some way after entering insolvency, helping to save around 230,000 jobs.
Phillip Sykes, President of R3, said: “There is much more to insolvency than business or personal finance failure. As the economy continues to recover from recession, business recovery and renewal will be an important part of the economic landscape.
“Insolvency practitioners witness first-hand the human cost of business failure and will make every effort to protect jobs where possible. The sooner insolvency practitioners’ advice is sought, the more chance there is of business and job rescue. The insolvency profession is increasingly helping businesses outside of formal insolvency procedures too.”
In total, around 10,400 businesses continued operating after working with the insolvency profession, either benefitting from support in a formal insolvency or working with the profession to avoid insolvency. These businesses employed approximately 540,000 after receiving support.
The profession also provided advice to around 135,000 people about their personal finances.
Phillip said: “The insolvency profession is there to ensure a balance between creditors and debtors. Insolvency practitioners have a responsibility to creditors to make sure they are repaid as much of their money as possible, and help make sure businesses and individuals do not get away with reckless or fraudulent racking-up of debt.
“The next five years could see key changes to the insolvency landscape. Household debts are rising again, while the current climate of creditor forbearance, record low inflation, and record low interest rates may not last. Problem debt is a major policy issue for the new Government; the insolvency profession has a unique insight into the effects problem debt has and importantly, how it can be tackled.”
The research also found that, last year, the insolvency profession was set to help individuals repay £5bn in debts to creditors over the next five years.
There are around 1,750 insolvency practitioners in the UK, with around 12,000 people employed in various roles within the insolvency profession.
UK insolvencies peaked in 2009 with 26,000 business insolvencies and 160,000 personal insolvencies; by 2014, business and personal insolvencies had fallen to 18,000 and 114,000 respectively.