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Tuesday 28th of July 2009

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July 27, 2009

Fall in corporate insolvencies unlikely to be sustained

by Gill Montia

Story link: Fall in corporate insolvencies unlikely to be sustained

The second quarter of 2009 saw a slight drop in the number of corporate insolvencies in England and Wales.

In the three months to the end of June, 4,814 companies became insolvent, an 11.3% decrease on the previous quarter and a 43.2% rise on the same period of 2008.

The decline takes the total number of companies entering into insolvency in the first six months of 2009 to 10,242, up 33.8% on the first half of 2008.

However, figures compiled by PricewaterhouseCoopers (PwC) come with a warning of a “potential climb” in the number of companies going bust during the final quarters of the year.

PwC partner in business recovery services, Mike Jervis, comments: “Our analysis of this quarter’s stats does show a slight drop in the number of insolvencies, but when we look back over the last five years we see that quarter two does traditionally have a dip in numbers.”

He adds: “Furthermore, we are now seeing quarterly numbers in the four and five thousands, not the two or three thousands we have grown used to.”

Mr Jervis advises businesses not to take the most recent data as a sign that the recession has bottomed out and to continue to plan cashflow and profitability “obsessively”.

According to PwC, the second quarter of the year saw the trend for the worst hit sectors continue as follows: construction (726 companies); manufacturing (653); retail (540); hospitality and leisure (227) and real estate (227).

 

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