In England and Wales, there were 3,971 company insolvencies in the third quarter of 2012. This represents a decrease of 2.8% on the previous quarter and a decrease of 6.6% compared to the third quarter in 2011.
Individual insolvencies in England and Wales – bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) – were at 28,062 in the third quarter of 2012, a decrease of 7.2% on the same period a year ago.
In Scotland too, insolvency rates for the third quarter of 2012 are down compared to the same period last year, with 282 company liquidations (a decrease of 11.9%) and 4,063 individual insolvencies – Sequestrations, LILAs and Protected Trust Deeds – a decrease of 24.5%.
These figures look promising, but as Invocas Group Executive Chairman, John Hall, explains, things may still get worse for businesses before they get better: “Whilst the headline reduction is good news, other research suggests that this does not reflect any real improvement in the economy. There are many ‘zombie companies’ which continue to limp along, just able to service their borrowing costs but not repaying debt or generating profits. Experience of previous recessions suggests that many of these companies will fail as soon as there is any sustained increase in confidence and liquidity in the marketplace.”
Similarly, it may be wise to take the decline in individual insolvencies with a pinch of salt. John says: “This is good news although it may be only a temporary respite for many individuals, as new sources of debt become available to them. What is clear is that we are still nowhere near to having a healthy growing economy with a population that can manage its debt.”
To find out more about the debt advice and solutions that we can offer, visit our Debt Solutions page.