Company insolvencies in England and Wales fell in the third quarter of this year, according to official government figures released today.
The Insolvency Service said company liquidations were down 5% from the second quarter to a total of 4,716, although this was still 15% higher than the same period last year.
Alan Tomlinson, partner at insolvency practitioners Tomlinsons, said: "While the reduction in company insolvencies during the third quarter is to be welcomed, the overall figure is still very high relative to last year and the situation could potentially deteriorate further in 2010 when the Revenue becomes less accommodating.
"Many of the businesses that approach us have been crippled by reduced turnover levels and are accumulating significant arrears of VAT and PAYE.
"When the Revenue starts to apply pressure on businesses that are behind on tax, and this could happen sooner rather than later, company insolvencies will spike up sharply,” he added.
There was a split between compulsory liquidations, which company directors can ask the courts to direct, and creditors’ voluntary arrangements which a group of lenders agree before approval by the courts. Liquidations fell 12.9% from the level in the third quarter 2008, while the latter has risen by 30.2% since the same period.
Graham Rusling, managing director for Barclays Business Support and Recoveries, said: “A quiet September on the administration front has given way to increasing activity in October and further warning signs that 2010 will not be a quiet one for restructuring teams in UK banks, something we are prepared for."
Rusling also warned that the type of corporate insolvency coming through now and in 2010 will frequently be businesses that have taken advantage of virtually all recessionary assistance on offer from government, lenders and investors, and still have not “seen their fortunes improve sufficiently to see a viable future”.
© Crimson Business Ltd. 2009