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Corporate insolvencies on the rise while personal insolvencies fall
The number of company insolvencies increased in the first quarter of 2012, although personal insolvencies were down compared to last year, figures from the Insolvency Service show.
There were a total of 4,303 liquidations in the first three months of 2012, an increase of 0.2 per cent on the previous quarter and an increase of 4.3 per cent on the same period a year ago. This comprised of 1,238 compulsory liquidations and 3,065 creditors' voluntary liquidations
The number of personal insolvencies however, fell in the three months to March to 28,723 insolvencies, down by one per cent from the previous quarter.
This was made up of 9,132 bankruptcies, 7,897 Debt Relief Orders (DROs) and 11,694 Individual Voluntary Arrangements (IVAs).
The Insolvency Service acknowledged that recent changes in legislation may have impacted the overall numbers of those applying for DROs. Since April 2011, individuals who have accumulated money in a pension scheme are now eligible to apply for debt relief, likely to affect the numbers of DROs and expected to have some impact on the numbers of bankruptcy orders.
Speaking to the BBC, Charles Turner, vice president of the Insolvency Practitioners Association predicted that the number of insolvencies could continue to rise this year.
"More sole traders and partnership businesses [are] seeking advice on debt issues as they struggle to cope with the recession," he said.
"There remains real concern about the prospect of a new wave of personal insolvency casualties with many consumers facing further challenges to their household budgets, not least from rising mortgage costs."