The financial crisis brought about by the recession is far from over going by the rise in the insolvency figures for the second quarter of the year. As per the figures, more than 4,000 businesses were forced into liquidation over the past three months.
Research from the Insolvency Service shows that for the second quarter of the year there were a total of 4,080 compulsory liquidations and creditors’ voluntary liquidations in England and Wales. This is an increase of 0.5% on the previous quarter, which implies that companies continue to face pressure even as the country approaches the third anniversary of the recession.
A further breakdown of the figures shows that there were 1,169 compulsory liquidations and 2,911 creditor’s voluntary liquidations. Compulsory liquidations declined to 9.9% on the previous quarter and by 21% when compared to the second quarter of 2009.
Creditor’s voluntary liquidations went up by 5.4% on the previous three months; however they went down by 18.3% on the corresponding quarter of last year. The study also shows that in the twelve months ending in the second quarter of 2010, there approximately 1 in 127 that were active, implying that those who went into insolvency were 0.8%. This is a small improvement on the figures from the last quarter where the figures showed 1 in 120.
On a positive note, though there was a rise in numbers over the first quarter of 2010. Overall there was a decline of almost a fifth when compared to the same time period in 2009, implying a year-on-year improvement in company stability. Banks are also reporting profits of over £15 billion, and businesses are now in a better position than they were last year. However, the numbers are still worrying for both companies and individuals.
Despite the slight improvement, the picture still remains grim. It is not just the companies that are declaring bankruptcy but also individuals who are facing dire financial circumstances. A study by the Consumer Credit Counselling Service (CCCS) reveals that more self-employed people were seeking debt advice to deal with their debt including hair dressers and taxi drivers. Then again, students too have been saddled with higher interest rates on student loans.
Needless to say, the picture is grim. However, declaring bankruptcy is not the only way out to deal with debt. A silver lining is that most reputable companies in the UK offer free debt advice so if you find yourself in a difficult financial situation you can talk to the experts who can advice you on various debt solutions such as IVA (Individual Voluntary Arrangement) or debt management plans that can help you take control over the situation.