News | Legal News

28 October 2016

Increase in corporate insolvencies ‘not Brexit-related’

The number of businesses becoming insolvent across England and Wales increased in the latest quarter, new figures show.

An estimated 3,633 firms entered formal insolvency between July and September, 2.2% higher than the previous quarter and 1.1% more than the same period in 2015.

However, experts say the increase cannot yet be attributed to the UK's decision to leave the EU.

The number of firms ending up in compulsory liquidation - when a winding-up order is obtained from a court and a business is killed off - is down 4.5% on the previous quarter.

However, the figure has increased by 2.4% when compared with the same period in 2015, with 632 companies being subjected to this specific insolvency procedure.

Other measures of corporate insolvency include the uptake of company voluntary arrangements (CVAs) which can be used to pay creditors over a fixed period.

Andrew Tate, president of insolvency and restructuring trade body R3, said: "A quarterly rise in corporate insolvency numbers is not necessarily an indicator of Brexit-related financial problems for UK companies. At least, not yet."

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