9 May 2005

The Department for Constitutional Affairs today published statistics for company winding up, and creditors' and debtors' bankruptcy petitions issued in the High Court and county courts of England and Wales during the first quarter of 2005.

In the first quarter of 2005 the following number of petitions were issued:

• 2,892 company winding up petitions - an increase of over 10% on the petitions in the same quarter of 2004;
• 4,861 creditors' petitions - an increase of nearly 7% on the petitions in the same quarter of 2004;
• 7,528 debtors' petitions - an increase of nearly 47% on the petitions in the same quarter of 2004.

Edward Cook, partner and licensed insolvency practitioner at our Manchester office commented:

"These figure are not definitive but are certainly a gloomy indicator of troubled times ahead.

"Scratch the surface and there are plenty of struggling companies managing to negotiate settlements, arrangements and deferred payments with their creditors. Winding up is still a last resort and the fact the figures for compulsory liquidations are rising shows that there are deep seated problems.

"All we need is a hike in interest rates, which is widely expected following the election, to trigger more pressure on these businesses that are only just keeping their heads afloat and the numbers will increase again.

"A hike in personal bankruptcies is not unexpected for two reasons. An increased level of consumer debt has resulted in increased petitions for bankruptcy. Also since the bankruptcy rules changed last year, insolvent individuals consider it easier to be a bankrupt for a year than undertake an IVA (arrangement with creditors) for as long as 5 years."

See www.dca.gov.uk for detailed breakdown of the figures.