Commercial court cases rise in recession

THE NUMBER of winding-up petitions presented to the High Court rose by a quarter to 7,166 last year as UK companies continued to struggle, according to research released today.

This drove a 1,282 rise in the total number of commercial cases launched in the High Court last year, up to 49,166 from 47,884 in 2010.

“There was a substantial increase in commercial court disputes last year, as the UK economy headed towards a double dip recession,” said Geraldine Elliott of City law firm RPC, who produced the report.

“Commercial litigation tends to increase when the economy underperforms and businesses’ revenues decline. Liquidations are an important indicator for the overall health of the economy: when the economy underperforms, winding-up petitions increase.”

But although the number of commercial court cases has increased during the financial crisis there has not been the dramatic rise that some observers had predicted.

RPC suggests that many firms may be choosing to settle disputes on a commercial basis before the case reaches court, or prefer to opt for arbitration proceedings which provide greater secrecy for firms.