Insolvencies on the rise

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The latest Insolvency Service statistics showed 4,260 company insolvencies in England and Wales during the final three months of 2011, a marginal increase on the third quarter but 7.2% ahead of a year earlier.

Frances Coulson, president of insolvency trade body R3, said 2012 was likely to be a "very difficult year" with smaller firms in the line of fire and propped up only by the forbearance of lenders.

Coulson warned: "We have known for a while that many businesses are surviving but not thriving, operating as 'zombies' and eventually some would have to fail. What is still clear, however, is that insolvency numbers are historically low compared to previous recessions and we have not seen volume of business failures that one would expect.

"This is certainly the calm before the storm."
Personal insolvencies fell 5.6% year on year to 28,973 during the past year, but experts warned of the impact of rising unemployment -currently 2.68 million - in the year ahead.

Deloitte partner Louise Brittain said: "As the labour market continues to deteriorate we will see more households struggle to pay their debts as unemployment levels increase.

"We have seen a noticeable increase in professionals filing for bankruptcy and we can see this trend continuing."