Business failures worse than a year ago

9 May 2011

9 May 2011 | Angeline Albert

More companies were wound up in the first quarter of 2011 in England and Wales than in the previous three months, and than during the same period a year ago.

The number of liquidations (both compulsory and voluntary) rose by 3.7 per cent to 4,121 between January and March 2011 compared with three months prior, according to the Insolvency Service.

This figure was also 2.1 per cent higher when compared with the same period in 2010.

The number of creditors’ voluntary liquidations grew by 9.7 per cent to 3,047 in the first three months of 2010. The figure in the fourth quarter of 2010 was 2,777. In the twelve months to the end of March 2011, one in every 139 active registered companies went into liquidation.

The amount of insolvencies in Scotland also increased on the quarter from 245 to 279, and in Northern Ireland the number grew from 85 to 94.

A spokesman for the Insolvency Service told SM the figure reflected the turbulent economic climate.

These official figures are contrary to findings from information services firm Experian, who reported a 10 per cent fall in the number of business failures when comparing 2011 with 2010.

Rising input costs have been described as a key factor contributing to the rise in company liquidations.

“The rise in corporate insolvencies results from a combination of factors that are dragging economic growth to a snail’s pace. Rising global commodity prices are putting pressure on businesses at the same time that demand is falling,” said Malcolm Shierson, partner in the recovery and reorganisation practice at Grant Thornton.

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