Support from employees may be helping keep companies afloat

Fears of a rise in the number of business failures have been allayed by recent official insolvency figures.

The number of company administrations, which rose sharply in the second quarter of 2013, has fallen back to a similar level as the beginning of the year. There were 544 administrations in the third quarter, compared to 622 the previous quarter and 557 in the first quarter.

Jeremy Oddie
Mitchell Charlesworth
Head of Recoveries &
R3's North West
Regional Chair
Jeremy Oddie

Jeremy Oddie, Head of Recoveries at Mitchell Charlesworth and also North West chair of the insolvency trade body R3, said last quarter’s rise in administrations could possibly have been a one-off. He said: “The figures are surprising. Economic recovery usually heralds an increase in insolvencies as creditors begin to take a tougher stance towards debtors as the economy improves.

"Although we’ve heard reports of creditor pressure increasing, businesses may also be receiving a helping hand from their employees. Employees making sacrifices to keep their employer afloat was not uncommon during the depths of the recession, as the recent Grangemouth story showed.

“It may take a little while for the recent economic growth to have an impact on insolvency figures. Meanwhile interest rates remain low, which will continue to give struggling businesses a helping hand.”

The figures show administrations fell by 0.7 per cent compared to the same quarter in 2012, liquidations were down by 2 per cent, receiverships by 8.6 per cent and CVAs by 5.6 per cent.

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