LONDON — Company liquidations and individual insolvencies in England and Wales soared to record levels in the second quarter as the economy was throttled by recession and the global credit crisis, data from the government’s Insolvency Service showed Friday.
There were 33,073 individual insolvencies in the second quarter on a nonseasonally adjusted basis, the highest level since records began in 1960. That compared with 30,253 in the first quarter of this year and marked a 27.4% increase from the second quarter of last year.
Company liquidations totaled 5,055 on a seasonally adjusted basis, the highest level since that series began in 1998. That was 2.9% above the total seen in the first three months of this year and represented an increase of 39.1% from the second quarter of last year.
Andrew MacCallum, managing director at restructuring and turnaround firm Alvarez and Marsal, said companies had survived the past year by significantly cutting costs, but many were now exhausted financially just as some positive signs (Where? All those positive signs are brought to you by ‘intentional misinterpretation’ of statistical data.) on the economy were emerging.
“More than five thousand companies may have gone into administration in the last quarter, but we can expect to see that figure exceeded in every quarter until at least the end of 2010,” he said in a note. “Credit is still tight and many businesses are loaded with debt that they can’t service.”
The breakdown of the figures showed there were 1,457 compulsory company liquidations, 6.8% less than in the first quarter but 8.7% more than in the second quarter of last year.
However, voluntary corporate liquidations totaled 3,598, a 7.4% increase on the first three months of the year and 56.8% higher than in the second quarter of 2008.
Nonseasonally adjusted figures showed there were also 1,529 other corporate insolvencies in the second quarter, including a 94.9% year-to-year increase in receiverships, a 19.8% rise in company voluntary arrangements, and 9.5% gain in administrations.
The breakdown of the individual insolvency figures showed the number of individual bankruptcies rose 15.3% from a year earlier to 18,870.
Individual voluntary arrangements — a formal agreement drawn up through an insolvency practitioner for an individual to repay debt to creditors — increased 27.4% on the year to 12,225. There were also 1,978 debt relief orders.
AUGUST 8, 2009, 1:43 A.M. ET
By NICHOLAS WINNING
Source: The Wall Street Journal