Company liquidations forecast to reach highest peak since end of last recession
• 23,713 liquidations predicted
• Five times more liquidations than insolvencies
The number of companies ceasing to trade is forecast to reach its highest peak in sixteen years, according to data obtained by Top 25 accountancy firm Wilkins Kennedy.
The number of companies closing their doors in the year to March 31 2009 will have reached 23,713, according to Wilkins Kennedy who analysed data obtained from Companies House. This is the highest number since 1992-93, when the UK economy began to emerge from recession and liquidations reached 28,700.
The forecast for 2008-09 shows a 17% jump in liquidations from the previous year when company liquidations reached 20,195.
The data also shows that there were nearly five times as many company liquidations as company insolvencies; 4,820 companies became insolvent in the last year.
Keith Stevens, Insolvency Partner at Wilkins Kennedy, comments: “The number of liquidations is running at nearly five times the rate of company insolvencies, which shows that far more companies are closing down than the official insolvency figures reveal.”
“We are seeing an increasing number of companies choosing to throw in the towel and cease trading early rather than hanging on until the bitter end and waiting until they are insolvent. Other business owners are voluntarily closing less profitable subsidiaries in order to streamline and free up capital to support their core operations.”
Wilkins Kennedy says that some of the liquidations will also be a result of lenders refusing to extend credit to businesses which are otherwise trading profitably.
Keith Stevens adds: “Falling demand and the reluctance of lenders to extend credit are having a major impact on the ability of companies to continue trading.”
“Liquidations tend to peak as the economy emerges from a recession, so we could see even more companies shutting up shop as those weakened during the downturn finally succumb.”
Wilkins Kennedy says that the flood of company liquidations has now burst its banks, going far beyond the previous high water mark set after the collapse of the dot-com bubble in 2002.
In a seperate study, Wilkins Kennedy found that construction and property service companies accounted for over a third (34%) of all UK corporate insolvencies at the end of last year.
Keith Stevens says: “A plunge in the value of both commercial and residential property prices means that projects all over the country are being scrapped. Many property services companies may have expanded too far during the prospects boom of the past decade and can no longer see a path back to profitability.”
ENDS
Press enquiries:
Keith Stevens
Partner
Wilkins Kennedy
Tel: 01784 435 561
Mobile: 07880 601 961
Emily Jupp or Nick Mattison
Mattison Public Relations
Tel: 020 7645 3636
