R3 comments on Q1 2016 insolvency statistics
Commenting on the insolvency statistics (for January to March 2016) published by the Insolvency Service today, Phillip Sykes, president of R3, the insolvency trade body said:
“Corporate insolvency numbers last rose at the start of 2014, and despite the rise this quarter, numbers are still well below where they were this time last year. However, UK businesses are starting to have a tougher time than they have had over the past few years.
“It should be noted, though, that the rise is driven by compulsory liquidations which indicates that creditors, probably including HMRC are beginning to lose patience with customers who are not paying their debts.
“At the same time it is interesting to see that the estimated liquidation rate is at its lowest level since comparable records began in 1984, this is a sign of the continuing strength of the economy.
“There has been a drop in the number of administrations which may be down to the increasing move by the insolvency profession and lenders to embrace restructuring outside of formal insolvency processes.
“Creditor voluntary arrangements are their lowest since 1998. These are primarily used by the retail sector, and until headlines this week, there hadn’t been a large number of retail failures at the very start of the year.
“Following the recent administrations of BHS and Austin Reed, it will be interesting to see if the next quarter’s insolvency figures show if these are just the tip of the iceberg of a wider problem on the High Street, and if any job losses have an impact on the personal insolvency statistics.”