The number of companies filing for administration jumped by nearly 125 per cent in the final three months of last year as the financial crisis and the sharp economic downturn took its toll.
Consumers also felt the pain as the number of bankruptcies last year soared to the highest level since records began in 1960. Over 350 people a day are now becoming insolvent.
The total number of businesses going bust, which covers administrations and liquidations, rose by more than 50 per cent as increasing numbers of companies struggled to access finance or secure insurance.
Some 2,018 businesses entered into administration – the insolvency scheme usually used by larger companies – between October and December last year, up from 575 in the final quarter of 2007, figures from the Insolvency Service show. This is an increase of 251 per cent.
However, that figure includes the administration of one company that had 729 managed service businesses.
Stripping out that collapse in September 2008, the number of businesses filing for administration hit 1,289 in the final three months of the year, up 124 per cent from the comparable period.
While today’s data was worse than expected, experts warned that the figures were set to rise higher in the coming year.
Malcolm Shierson, a partner in the recovery and reorganisation practice at Grant Thornton, said “These numbers are bad, but they are going to get progressively worse as business and consumer confidence continues to fall.
“Companies across all sectors will struggle when they need to refinance their debt as lenders rein back on corporate lending. On top of this, the arteries of business are being clogged up as credit insurers cut back on the provision of cover for suppliers and contractors.”
The number of people going insolvent surged by nearly 20 per cent. Some 19,100 people went bankrupt in the final three months of the year, up 22 per cent compared to the same period in 2007.
A total of 67,428 people went bankrupt last year, up from 64,480 in 2007, and the highest figure since records began in 1960.
The number of borrowers entering into an Individual Voluntary Arrangement (IVA) – a form of insolvency open to those with unsecured debts of £15,000 or more, was up 12 per cent.
February 6, 2009
Source: Times Online