Warning despite insolvencies fall

Reality: Chris Ratten

Reality: Chris Ratten

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Lancashire firms have been warned not to become complacent despite a regional fall in the rate of business insolvency.

The region saw the biggest turnaround in the country since last year.

But Lancashire firms have been warned that a rise in interest rates may drastically affect the figures in future.

During January to June, 0.46 per cent of the business population in the North West failed, compared to 0.56 per cent of the business population in 2013.

Nationally, the number of companies entering administration decreased for the fourth time in a row in the second quarter of 2014, to reach the lowest level since 2005.

Figures from the Insolvency Service show there were 410 administrations during the quarter – 35 per cent lower than the same period a year earlier.

Company voluntary arrangements and receiverships also 
decreased, while liquidations fell to their lowest level on record.

Chris Ratten, Chairman of Baker Tilly’s Restructuring and Recovery Group based in Manchester said: “In the past, we’ve tended to see an uplift in corporate insolvencies as the economy starts to come out of recession, but it’s very different this time around.

“The number of company liquidations, administrations, company voluntary arrangement and receiverships are all down on the same period last year, which on the face of it looks very positive.

“However, these numbers hide the reality that many firms owe their continued survival to ongoing record low interest rates.

“Many of these companies, particularly those who have been placed onto interest-only deals with their banks, will have to brace themselves for the promised rate rises over the new few years.”