New figures have shown a quarter-on-quarter decrease in business insolvencies in the final quarter of 2012.
The latest figures from the Insolvency Service showed that the number of compulsory liquidations and creditors’ voluntary liquidations dropped by 3.3 percent quarter-on-quarter and by 10.7 percent year-on-year.
Meanwhile, the number of other corporate insolvencies – including receiverships, administrations and company voluntary arrangements – decreased by 14.2 percent compared to the corresponding quarter of 2011.
However, this is not the complete picture. While the latest Begbies Traynor Red Flag Alert showed a 12 percent decrease in the level of combined distress (companies facing either significant or critical financial issues) across the UK, this was in stark contrast to the financial well-being of most consumer facing sectors.
In fact, combined distress rose by 48 percent quarter-on-quarter for the bars and restaurants sector, with a similar trend demonstrated for general retailing (34 percent), food retailing (30 percent), leisure (30 percent), media (25 percent) and sport and recreation (20 percent).
Furthermore, the overall research showed more businesses moving into insolvency as the number of CCJs issued decreased. In these circumstances, it is often the lenders and landlords associated with these businesses that suffer the brunt of the losses incurred.
This is particularly true following a decision in the High Court last April, ruling that any rent that was due before a company collapsed should not be considered an administration expense, even if the administrators continue to trade from the property during the rent period. Rent due will be afforded the same status as the debts of other unsecured creditors.
Therefore, it is important that landlords and other creditors seek specialist legal advice, and the team at Palmers can advise on which procedure is mostly likely to result in the recovery of monies owed.