Insolvencies are on the increase

The Insolvency Service said 782 companies were declared insolvent in the first quarter of 2011, compared to 643 in the last quarter of 2010.

Grant Thornton, the accountancy firm, blamed the rise on “a combination of factors that are dragging economic growth to a snail’s pace”, namely rising global commodity prices at the same time as falling demand.

Joe McLean, a Leeds-based partner, said: “Of particular note is the volume of distressed retailers we are dealing with. This is unsurprising given the rise in input prices and increase in VAT which comes at the same time as the Government and households implement austerity measures to reduce their debts.”

He said creditors are increasingly questioning the value of CVAs in the retail sector.