Insolvency body R3 surprised by fall in failures

BUSINESS recovery professionals’ trade body R3 says it is “surprised by the 7.3% fall in corporate insolvencies in 2013.

The Office for National Statistics said in 2013 14,982 companies went into liquidation, the lowest since 2007.

Richard Wolff, the North West chair of R3 and head of corporate recovery and insolvency at Manchester law firm JMW says the figures show business insolvencies are now a third down from their peak at the end of 2008 and well below what might be expected following a period of recession.

“The corporate insolvency figures are in keeping with the general downward trend in new cases since the recession. Given the recent pick-up in the economic recovery though, it is not clear how long this trend will last.
 
“The early stages of recovery can be harder for businesses to negotiate than a recession. With the number of business failures still low, it may be that the recovery hasn’t taken hold as firmly as it might appear.
 
“Stuttering growth, low interest rates and patience on the part of creditors have helped keep corporate insolvencies lower than they normally would have been after a recession. Some businesses have taken advantage of the extended gap between recession and growth to put their finances back in order but this won’t be the case for everyone.”

He believes a future rise in interest rates from its current historic low of 0.5% may trigger an uptick in business failures.