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Government Predicts Increase in Insolvencies

December 2014

As the economy recovers, we can expect to see a rise in insolvencies based on government figures. Corporate insolvencies are forecast to increase over the next 12 months — particularly amongst the wholesale and retail sectors.

R3’s Eastern region chairman Frank Brumby, a director at the Norwich office of Isadore Goldman, said: “Corporate insolvencies have historically peaked during the early stages of an economic recovery and a significant proportion of R3’s members believe this could be the case once more.”

For many, this is nothing new; a rise in insolvencies like this was last seen during the 2008-9 recession before losing steam as the recovery failed to take off. The economy is essentially experiencing ‘growing pains’. Cash reserves that have been depleted during the recession begin to run dry, causing creditors to become less patient. The consequences of failing to invest during the recession can be felt as businesses can grow quickly; too quickly for cash flows and supply chains to cope.

Is this the price to pay for a strengthening economy? Frank Brumby states that “it is important to remember that insolvency is not always the end of the road: it can provide an opportunity to rescue parts of the business and so save jobs.”

Aston Shaw can put you in touch with trusted and reputable insolvency practitioners who offer our clients complete discretion and practical guidance. Ensure you seek advice as soon as possible in order to maximise your chances of avoiding liquidation and having to cease trading. Find out how we can help you by clicking here.

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