UK company liquidation numbers sharply down in Q1

The number of companies that went into liquidation in the first quarter of 2013 was down by 15.9 per cent as against the period a year ago, according to the Insolvency Service.

Personal insolvencies also fell 12 per cent in the first quarter of 2013, down to a five-year low of 25,006 for the quarter.

If the trend were to continue for the rest of the year, it could mean the total was below 100,000, which see the annual total down to the lowest level seen since 2005.

According to analysts, an improvement in the figures had come from a combination of record low interest rates and healthy employment levels.

However, many people were still struggling behind the numbers, Mark Sands, the head of personal insolvency at RSM Tenon said.

He added, the picture was not as rosy as the figures suggested for many who had remained in employment, even if they had permanent jobs.

He said rising costs, frozen salaries and wage cuts could have an impact on family finances, especially if they were in debt before the credit crunch.

England and Wales, saw 3,619 compulsory and voluntary company liquidations during the first three months of 2013, down 5.3 per cent on the previous quarter.

Around 0.7 per cent or one in 154 of all companies went into liquidation, down from a 1993 peak of 2.6 per cent and a 25-year average of 1.2 per cent.

Experts were not sure as to why company and individual insolvencies had sharply dipped during a period when the economy was still struggling.

Personal insolvencies fell to their lowest level since 2008 and the number of people being declared bankrupt fell 27 per cent on last year.

According to Insolvency Service statistics there were 25,006 individual insolvencies across England and Wales in the first three months of 2013, the lowest figure recorded since the first quarter of 2008 and a fall of 12.9 per cent on the start of 2012.

The number of bankruptcies stood at 6,663 out of the number of insolvencies - the lowest figure since  winter 2002 - with the remainder having to take other less drastic legal measures to resolve their debts. A total of 7,219 people were on Debt Relief Orders (DROs), while 11,124  were on Individual Voluntary Agreements (IVAs).

DROs, a cheaper alternative to declaring bankruptcy, were introduced in 2009 and had been seen as distorting insolvency figures by reducing the number of bankruptcies, even though they also indicated high levels of indebtedness.