Dramatic rise predicted in North East insolvencies
Dramatic double-digit rises in both personal and business insolvencies over the next 18 months are being predicted in a new survey of insolvency practitioners across the UK .
The survey, conducted by Insolvency Trade Body R3, found that industry experts expected a rise of 41% in business insolvencies from 2007 to 2009.
The North East looks unlikely to be immune to this rising trend, with insolvency practitioners (IPs) in the region already reporting a significant rise in the number of requests for help and advice over recent months, mostly from companies facing financial problems.
Respondents anticipated a rise from the official figure of 13,091 corporate insolvencies in 2007 to 15,693 for 2008 and 18,440 for 2009, a 41% increase on 2007, though this is a conservative estimate as 18% of respondents choose a figure over ‘over 20,000’ as their 2009 prediction.
More than half of IPs surveyed said they are seeing an increasing number of unsecured lenders attempting to secure or securing of debt against individuals’ homes, as well as expecting a significant rise in the numbers of homes repossessed as a result of defaults on secured debt.
Jim James, R3’s North East regional chairman, said: “The predicted increase in business insolvencies is extremely worrying, and if this increase occurs will mean we will start to approach the numbers we saw at the peak of the last recession in 1992.
“For the last few years, a number of businesses that perhaps were not performing well have been kept alive artificially by the easy availability of credit, which has now dried up.
“The days of easily-available credit are gone and won’t be coming back, and it is crucial that both businesses and individuals who are facing up to difficult situations get professional advise as early as possible on how they might manage their financial matters to achieve the best possible outcome.”