Drop-off in insolvencies is temporary, firms told

Corporate insolvencies fell by almost half in June

3 July 2009 17:00

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Businesses have been warned not to read too much into news that the number of corporate insolvencies fell sharply in June.

Since the beginning of 2009, around 350 businesses have been going into administration on a monthly basis, yet the latest figures from business advisory firm KPMG found that just 178 businesses went under in June.

Although there are typically fewer insolvencies during the summer months, such a dramatic fall was unexpected in the current climate, KMPG said.

However, Richard Fleming, UK head of restructuring at KPMG, warned that this should not be taken as a sign of things to come.

“We are not convinced that this indicates an upturn in sentiment; more a temporary reprieve in advance of a second wave of insolvencies,” he said.

Fleming said HMRC’s decision to allow companies to delay tax payments had bought businesses some time, but he predicted another spate of companies going bust towards the end of 2009.

He added: “The total number of insolvencies so far this year is at 1,571, some way behind the 5,000 we predicted for 2009, but our conversations with businesses and lenders suggest this number will be reached quickly after the holiday season with a wave of insolvencies in quarters three and four.”