Company Insolvencies Rise

Business owners will be interested to read that, according to statistics provided by The Insolvency Service, the number of company insolvencies rose in the third quarter of 2017 when compared with the same quarter of last year in England and Wales. It will be interesting to monitor the impact the recent increase in the Base Rate may have on these figures going forward into the later part of this year and into 2018 as there are no doubt many businesses that have borrowing on a variable rate of interest such as an overdraft facility.

In the third quarter of this year the total number of company insolvencies was 4,152 with this being an increase of 14.5% when compared with the third quarter of last year. Creditors” voluntary liquidations made up 3,087 of the above figure with this being a rise of 21.2% in comparison to the third quarter of 2016. Compulsory liquidations totaled 665 with this being a 4.6% rise. Other company insolvencies amounted to 400 with this being a fall of 9.4%.

It is interesting but perhaps not surprising that when you compare the number of individual insolvencies in England and Wales between the third quarters of 2017 and 2016 there has also been an increase. In the third quarter of 2017 there were 27,807 and in the third quarter of 2016 there were 25,295 – an increase of 9.9%. There were 3,720 bankruptcies in the third quarter of 2017 but 3,936 in the third quarter of 2016 – a reduction of 5.4%. There were 6,274 debt relief orders in the third quarter of 2017 and 6,490 in the same quarter of last year – a fall of 3.3%. However, there was a big increase in the number of individual voluntary arrangements (IVAs) in the third quarter of 2017 with 17,813 of them compared with 14,869 in the third quarter of 2016 – an increase of 19.8%.

It is important that when a business is looking to borrow money it is able to be in a position to repay the liability in accordance with the agreement with the lender. In doing so, a margin should be built in if borrowing is on a variable rate of interest to allow for some increase in the Base Rate. The specialist commercial lending broker that we put you in touch with will no doubt discus this with you as it is something that the lender will no doubt cover with you when assessing your application for business finance.

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