Fall in the number of firms collapsing

THE number of companies going under has dropped to its lowest level since 2007, but experts warned that many firms are still under “pressure and distress”.

The volume of firms going into administration, receivership or a company voluntary arrangement dropped by 25 per cent on the previous quarter’s figures, to reach 986, the Insolvency Service said.

This figure was also a fifth lower than a year ago.

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Within this, 548 companies collapsed into administration during the third quarter – the lowest level since 2005.

There were also 3,971 company liquidations across England and Wales, which was not only a 3 per cent decrease on the previous quarter but the lowest figure in two years.

Analysts said that low interest rates and support from some lenders have helped to keep the business casualties at low levels.

Mike Jervis, a business recovery partner at PwC, said: “There are fewer insolvencies this quarter as a result of low interest rates and supportive lenders and stakeholders and this is a welcome backdrop for our recovery out of recession.

“However, there is clearly still pressure and distress out there and there are still some casualties.”

This week’s news that electricals chain Comet is poised to be placed into administration, which is putting around 6,500 jobs under threat, confirms that conditions are still tough for British businesses.

Bryan Jackson, a corporate recovery and insolvency partner at PFK, said that company liquidation numbers have remained “fairly static” since the middle of 2008, despite their recent fall.

Mr Jackson added: “Prior to the recession the quarterly corporate failure rate was almost 1,000 businesses fewer than now so it is important not to simply accept this fall as a positive sign that recovery is on the way.

“There remain many factors which are suppressing the corporate failure rate, including low interest rates, a relatively benign approach from lenders who are keen not to close businesses when they have a lot to lose, and business owners who are ploughing in years of cash reserves to keep their businesses afloat.”