Companies going into administration hits five year high

With so many big names going under it comes as no surprise that 2019 is shaping up to be the worst for business failures since the Credit Crunch.

The Government’s Insolvency Service reports that the number of firms going into administration in Q3 is the highest since 2014 although compulsory liquidations are down on two years ago.

The service said: “The seasonally adjusted figures show that there were 4,355 total underlying company insolvencies in Q2 2019 - a 0.4 per cent increase from Q2 2019. When compared to the same quarter last year, this was an increase of 1.6 per cent and the highest underlying level of insolvencies in any quarter since Q1 2014.”

There were 484 administrations in total which is is 20% higher than Q2 2019 and the highest quarterly level since Q1 2014. The liquidation rate remains low, with 1 in every 239 companies liquidated in the 12 months ending Q3 2019 and this was slightly down from 1 in 237 companies in Q2 2019.

One trend noted by ICSM Credit’s Paul Carrotte are firms who used to go into voluntary liquidation usually through the owner retiring or deciding to call it a day has fallen. He said: “We have seen instances of companies effectively stopping business and doing nothing. They have debtors chasing them for payment but they attempt to avoid paying up and by changing addresses or moving away hope to dump their responsibilities.”

The construction industry has been the worst hit by business failures this year with the highest number of new underlying company insolvencies with 3,106

Next is the accommodation and food services industry group that saw the largest increase in underlying insolvency volumes with 39 extra cases (a 1.7% increase).

And the Insolvency Service said the administrative and support services grouping saw 2,585 underlying company insolvencies in Q3 2019, however the group also saw the largest decrease in volumes with 50 fewer cases compared with Q2 2019 (a 1.9 per cent decrease). The wholesale and retail trade, repair of vehicles industrial grouping also saw a significant number of cases, with a total of 2,409 underlying company insolvencies. 

Ian Carrotte of ICSM Credit said this was a worrying time for industry. He said: “The best safeguard is to join ICSM Credit and get up to date credit information, run credit checks on potential and existing clients and so not get caught out. Being left a big debt by a collapsed customer can bring a small firm down and seriously damage a larger one.”

In Scotland insolvencies were also up, and by a higher percentage than south of the border but one piece of good news was Northern Ireland saw a substantial drop in the number of firms going to the wall this year.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the 'About Us' page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com