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Business insolvencies coming out of the storm

Monday 8th February 2010

By Mike Jones

PricewaterhouseCoopers analysis of the latest national corporate insolvency statistics found that 5837 companies entered insolvency in quarter four of 2009 - this is a 5.9% decrease on the same quarter of 2008 when the UK was in the eye of the storm of the recession.

The total number of companies entering insolvency in 2009 was 25,432 - a 20.6% increase on 2008 and the highest annual number of annual insolvencies for a decade.

Mike Jervis, partner in the business recovery services practice at PwC said: "The statistics have shown a slight decrease quarter on quarter, but they still remain at unprecedented levels. Our view on the economy is that it is at best stabilising, but with significant pockets of uncertainty remaining. In addition, with an election looming companies are holding out in the hope of better times ahead.

"Within the numbers, we see the year on year increase is driven by receiverships and Creditor Voluntary Arrangements (CVAs), but for different reasons. The CVA process has been around for a long time but has gained traction recently and can be particularly effective when used with multi-site businesses such as retailers, pubs and hotels. We expect to see CVAs and related processes such as schemes of arrangement continue to grow in popularity, partly as a backlash against the perceived misuse of pre-packs.

"In addition, the numbers of receiverships continue to rise and for 2009 were up 69% on 2008 - with a total number of 1468 companies entering into receivership. These figures are driven by Real Estate companies - another example of the profound effect this recession has had on the property industry "

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