PwC: Corporate insolvencies drop, but smaller companies still at risk

PwC analysis of today’s national corporate insolvency statistics found that 5,313 companies entered insolvency in the second quarter of 2012.  This is a decrease of 3.4% on the same quarter of 2011 and a decrease of 7.9% compared to the previous quarter of 2012.

However, the cumulative total corporate insolvencies for the past four quarters has actually increased by 3.3% to 21,832. This has been driven by an increase in Company Voluntary Arrangements (CVA) which are up by 17%, and liquidations which are up by 3%).

David Kelly, North West business recovery services part, PwC, commented:

“In what’s been a really positive week for the UK, it’s good to see that the number of insolvencies is down since the first quarter of the year. However, year on year, the numbers are continuing to rise.

This is being driven by a rise in CVAs which is due to distressed businesses looking to exit from multiple sites. In addition, the rise in liquidations is indicative of the pressures on smaller businesses facing difficult trading environments and who do not have the access to rescue options that larger companies have.

The short-term decrease in insolvencies looks good on paper and it’s encouraging that companies have weathered the storm of a double dip recession. However, unless consumers start spending, it looks likely that these numbers will deteriorate over the course of the year.”