Debt raises corporate collapse numbers in Q4

The number of companies collapsing under their debts stood slightly higher in the last quarter of 2011 as against the one before, but households appeared better at handling their bills than at any time since early 2009 when the recession was fully under way, according to official data.

According to the Insolvency Service, which records financial failures in England and Wales, the number of company liquidations – either compulsory because of a court order or where creditors agreed to a wind-up – totalled 4,260 in Q4 2011, 7.2 per cent higher from one year earlier and the highest number since the fourth quarter of 2009.

For the full 2011 year, total number of company insolvencies stood at 16,871, up 5.1 per cent from 2010.

Hotels, bars and restaurants sectors saw the highest increases in company insolvencies in 2011 compared with 2010, according to analysis by partners in the restructuring and insolvency unit of Freshfields Bruckhaus Deringer, a law firm. Overall they saw a 14.4 per cent increase.

Further, retailing and wholesale sectors ranked fairly high among company insolvencies with insolvencies up by more than 9 per cent for the year.

According to Adam Gallagher, a restructuring partner at Freshfields commenting on the relatively high insolvencies in the sector, consumers were reining in their spending, possibly as a result of salaries not keeping up with inflation and fears about job security, which was hitting revenues.