Figures released by the government’s Insolvency Service have revealed that company insolvencies soared by 56% in the first three months of 2009 as the number of people declaring themselves bankrupt hit record levels.
Corporate insolvencies rose to 4,941 in the first quarter of the year – an increase of 56% on last year and up 7.1% on the previous quarter.
Construction companies were particularly badly affected, with collapses rising by 50%, while manufacturers recorded a 23% rise in insolvencies in the last quarter.
There was a 2% rise in company administrations on the previous quarter, with 1,311 firms were placed into administration in England and Wales in the first three months of this year. This figure represents a 53% increase on the same period last year.
Insolvency experts predict the situation will worsen over the coming months as the recession takes its toll.
Graham Rusling, managing director for business support and recoveries, at Barclays Commercial said: “We expect administration numbers will continue to remain high even after it is confirmed that the UK is in recovery, as these numbers have tended to lag behind almost every other economic indicator.
“It is crucial that those companies that sense major challenges ahead communicate this to business partners including their bank as early as possible, which will offer the greatest flexibility in how these challenges are met, in many cases avoiding administration altogether."
Individual insolvencies also rose by 19% on last year while personal bankruptcies soared by 23.4%.
© Crimson Business Ltd. 2009