Business failures leap as credit crunch hits companies
Business sectors identified as suffering include agriculture, banking, food retail and clothing (although some of the sample sizes are small), but 10% of the quarter's failures are in building and construction.
Regionally, the East Midlands is hardest hit with insolvencies up 53.6%.
Creditors' voluntary liquidations increased by 14.1% but compulsory liquidations fell by 2.2%, perhaps reinforcing concerns about confidence as debtors go for CVLs whilst fewer creditors are pursuing compulsory winding-up. The popularity of the procedures amenable to corporate rescue - administrations and company voluntary arrangements - continues with growth of 23.7% and 37.6% respectively.
My own experience is that more businesses are considering an insolvency procedure than either 3 or 12 months ago. Certainly, businesses cannot borrow their way out of trouble at the moment and the signs are that advice about facing insolvency is being sought earlier - offering more prospect of a constructive solution.
Date: 9th April, 2008
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