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Company Insolvency levels Q2 2018

The recent statistics for personal insolvency rates showed a notable upturn in formal insolvency – an increase of 4.4% on the previous quarter and a striking 27.3% compared to Q2 2017.

But what about companies?  Here the picture is mixed: down 12.4% on the previous quarter but up 12% on the same quarter last year.

The underlying trend for company insolvencies is a very slight increase. 0.49% of companies went into liquidation in the year to 30 June 2018 compared to 0.48% the previous year. The peak rate in the last recession was 0.9% in 2008-9, so levels are quite low.

In terms of industry breakdown, construction and wholesale/retail are the most vulnerable sectors:

It is possible that the drop Q1 to Q2 reflects a traditional pattern of directors addressing problems in the period after Christmas and there is likely to be a knock-on effect from a number of high profile failures in recent months, such as Carillion and some high profile retailers, like Toys R Us. It can take a while for the domino effects of such insolvencies to be felt fully down the supply chain.

On the ground, insolvency practitioners are noticing an upturn in enquiries in recent weeks and are reporting receiving enquiries for advice and support from companies in industry sectors linked to retailers, such as recruitment agencies and shop fitters. Businesses are facing pressures from a number of sources such as the increase in the National Living/Minimum wage (currently £7.83ph for over 25s and set to be £9ph by 2020), costs associated with pension auto enrolment and ever increasing business rates.

With Brexit uncertainties, insipid economic growth and some prospect of an increase in interest rates, it is important that businesses are planning ahead carefully – and take advice early if they encounter financial difficulties.

If you or your business is struggling financially and need any advice, please call the PKF Francis Clark Business Recovery team who can help on 01392 667000 to arrange a free, no obligation, initial meeting.

FEATURING: Stephen Hobson
Stephen is a partner and a highly experienced Licensed Insolvency Practitioner. He qualified with a large international practice in London working on corporate investigations and… read more
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