ComRes’ analysis of the insolvency industry found that in 45 percent of cases, the business advised by IPs avoided full closure. Of those in formal insolvency procedures, 27 percent continued in some form. This comes against a background of falling corporate insolvency numbers, down 11 percent from 2009.
Former R3 President Lee Manning says the insolvency profession may seem at first glance an unlikely saviour of businesses and jobs, but a struggling business may well survive in some form:
“The findings also highlight practitioner work involves advising a business pre-insolvency or restructuring, often overlooked and by necessity under the radar. Our insolvency regime is shown to be flexible with a variety of options to suit any distress situation. I am heartened by the high numbers of jobs saved and the contribution that is making to the UK economy.”
The total number of business insolvency cases in the UK stood at 17,819 in 2006, and peaked at 25,432 in 2009 but has since declined by 11 percent to 22,590 for 2012.
“It may not feel like it with the succession of high profile retail collapses earlier this year – but business failure has been on the decrease since 2009,” Lee continues. “This is good news for businesses struggling through a very slow recovery. The picture could alter if asset values increase and interest rates go up, perhaps pushing insolvency numbers up as happened in previous recessions. However, if struggling business owners take action now, the outcome for them is likely to be far better.
“In the meantime, these findings show that, though minor changes could be beneficial, the UK’s insolvency regime is broadly working well. This is backed up by favourable comparisons to other international insolvency regimes,” he says.