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Topic starter
15/10/2012 10:42 am
On Saturdays programme there was some interesting statistics regarding bankruptcy in the UK as compared to other countries. It would appear that in the recession there are fewer companies being declared bankrupt fewer in fact than when there was a period of sustained growth. Countries such as Germany and Japan who are growing are showing higher levels of bankruptcy than we are.
The guess is that there is pressure on the banks and lending institutions not to push for bankruptcy as it will make the government figures look bad!
15/10/2012 10:52 am
I didn't see that on track, but I have read that there are 146000 "zombie companies" currently trading in the UK.
They're firms that aren't growing, are servicing interest on their debts but not repaying the debt capital, and perhaps surviving because of bank forbearance (as you mention).
When you speak to experienced insolvency practitioners that have worked through a few economic cycles they often say that insolvency figures (for companies and individuals) tend to be highest when the economy is on the way down or on the way up.
With company insolvencies fairly low, and individual insolvencies perhaps in decline also, we may be bumping along the bottom at the moment?
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15/10/2012 4:13 pm
The Bank of England base rate being at an historical low may also be part of the explanation here I think. Many individuals and companies can more easily service their debt interest payments and keep their heads above water.
As trust deed assistant says, it may be that once the economy starts picking up then we will see more insolvencies. The Bank of England may start worrying more about inflation and start increasing the base rate accordingly, tipping many over the edge...
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