Company administrations to continue at record level for at
least 12 months
2009 saw a record number of company administrations, with a
total of 4161 companies being placed in administration in England
and Wales that year. This is an 1.7% increase compared to the 4092
company administrations recorded in the year 2008*.
"There is no light at the end of the tunnel
for troubled companies that are relying on a fast economic recovery
to help them repair their balance sheets. Even though recent
figures technically signal the end of the recession the growth was
minimal and, so far, the recovery is too slow to reverse the
damage. The risk of the double dip recession remains real and
should not yet be discounted. Sadly, we cannot expect the number of
administrations to drop significantly below its historic highs
until Britain's economic output far outgrows its pre-crisis levels,
commented Malcolm Shierson, Partner at Grant Thornton's Recovery
and Reorganisation practice.
The number of troubled companies dropped by
13% last quarter with 849 companies being placed into
administration in England and Wales in the fourth quarter of 2009
(974 in Q3 2009)), according to statistics released today by
the Government's Insolvency Service. The latest quarter also
represents a drop of 34% on the fourth quarter of 2008, when 1,290*
administrations were recorded.
Meanwhile, company liquidations in England and
Wales dropped by 2% to a total of 4566 in the fourth quarter of
2009 compared to the previous quarter, when 4648 liquidations were
recorded (Q3 2009). This represents a 1% decrease on the same
period the previous year, when 4615 liquidations were recorded (Q4
2008).
"There has been a drop in the number of
business failures in Q4 compared to the previous quarter and
compared to the same period in 2008. While this is good news, the
number continues to be near a historic high and we expect the
number of liquidations to shoot up even further when the future
government stops extending the 'Time to Pay' Tax scheme," said
Shierson.
"The poor health of the UK economy is mainly
reflected in the persistently high number of administrations.
Typically large employers are placed in administration when they
run into trouble, whereas liquidations are more common among
smaller enterprises. There is as yet, little sign of liquidity
returning to the banking sector, and that will be key to any return
to normality," concluded Grant Thornton's Malcolm Shierson.
Ends
For more information please contact:
Alex Wessendorff, Grant Thornton Press Office,
T +44 (0)20 7728 2048, M +44 (0) 7983 990837, E
Alex.Wessendorff@gtuk.com