Company liquidations hit 16-year peak

Author: By Mathieu Robbins

The number of companies entering liquidation isset to reach its highest level
in 16 years according to the research, by accountancy firm Wilkins Kennedy.

The number of businesses ceasing to trade in the year to March 31 2009 is
expected to reach 23,713, according to the firm, which analysed data from
Companies House. This would be a 17 per cent rise on the previous year and
the highest since 1992-93, when the UK economy began to emerge from the last
recession and liquidations, which tend to peak towards the end of a
slowdown, reached 28,700.

The data also shows that there were many more company liquidations, where a
company stops trading, than insolvencies.

?The number of liquidations is running at nearly five times the rate of
company insolvencies, which shows that far more companies are closing down
than the official insolvency figures reveal,? Keith Stevens, insolvency
partner at Wilkins Kennedy, said. ?We are seeing an increasing number of
companies choosing to throw in the towel and cease trading early rather than
hanging on until the bitter end and waiting until they are insolvent.?

Wilkins Kennedy warned that some liquidations were happening because lenders
are refusing to extend credit to businesses that are otherwise trading
profitably.

Mr Stevens added: ?Falling demand and the reluctance of lenders to extend
credit are having a major impact on the ability of companies to continue
trading.?

Construction and property service companies accounted for over a third of all
UK corporate insolvencies at the end of last year, Wilkins Kennedy said.

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