Liquidations drop to their lowest level since the crash

 
Tim Wallace
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THE ECONOMIC recovery combined with sustained low interest rates has helped push the number of company liquidations down to its lowest level in seven years, official figures showed yesterday.

A total of 14,040 companies entered liquidation in 2014, down 6.3 per cent on the year. That represents the smallest number since 2007.

Just over 10,000 entered creditor’s voluntary liquidation, down 9.3 per cent on the year, to the lowest level since 2008.

However, the number who were subject to a compulsory winding-up order rose 2.9 per cent on the year.

“Low interest rates and falling inflation are combining to help keep insolvencies low,” said Louise Brittain from insolvency trade body R3.

“The number of companies going through an insolvency process is almost down to pre-financial crisis levels, although it’s taken seven years to get to this point.”

But BDO’s Ian Gould warned that businesses are not yet out of the danger zone.

“The recovery phase of the economic cycle has previously been the peak period for corporate insolvencies, mainly because businesses overstretch themselves and they try to grow too quickly,” said the business restructuring partner.

“The message to companies is – don’t be reckless. Make sure that growth is steady and sustainable. Now is a good time to grow, if you are careful.” Meanwhile, individual insolvencies fell to the lowest level since 2005, falling 1.8 per cent on the year to 99,196 in 2014.