The number of companies going insolvent is on the increase, something that could potentially also harm the fortunes of accountants for contractors.
Latest government statistics show a 0.1% quarter-on-quarter increase to 4,242 company insolvencies in the third quarter of this year. Whilst this increase is marginal, it is 6.5% up on the corresponding period last year when only 3,974 firms were declared insolvent.
206 firms applied for Company Voluntary Arrangements in Q3, compared to 187 in the second quarter. In the third quarter of 2010, only 159 companies chose to go down this route. Voluntary liquidations also recorded a 3.1% quarter-on-quarter increase.
Although the number of companies going into administration decreased by 22 on a quarter to quarter basis, 673 represents a rise of 31 on 2010's Q3 figure.
Whilst company insolvencies are increasing, the number of personal insolvencies continues to decline.
In the third quarter of 2010, there were 33,935 personal insolvencies. Last quarter the figure had dropped to 30,219. Over the same period, there has also been a 31% decrease in bankruptcies.
The number of people taking out individual Voluntary Arrangements was up to 13,048, a quarter-on-quarter increase of 905.
The number of Debt Relief Orders reached an all time high of 7,257 in Q3. This represented a 7.6% increase on Q2 for the method that was introduced in April 2010.
Debt Relief Orders are for people with debts of less than £15,000 and assets of no more than £300. The Insolvency Service changed the rules this year for DROs, IVAs and bankruptcies to exclude pension pots when calculating an individual's assets.