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More firms go to wall.

Byline: By Hugo Duncan and John Cranage

The number of businesses going bust jumped by nearly 11 per cent in 2006, figures to be published today will show.

Information group Expe-rian says that the number of corporate failures hit 20,067 last year -1,938 more than in 2005 and the highest number since records began in 1997.

The figures come just days after it was revealed that a record pounds 1.4 billion of bad debt was written off by creditors in 2006 as more than 100,000 people went insolvent.

Professional services firm KPMG estimates that this year saw around 110,000 people become insolvent -the first year the total has broken the 100,000 barrier.

The rise in corporate failures was the second in a row after falls in 2003 and 2004.

Jo Howard, marketing director for Experian's business information division, said: "Business failures fell in 2003 and 2004, then rose again in 2005 - also by 10.7 per cent - but it looked as though there were signs of improvement in the third quarter of 2006 when business failures fell by 4.1 per cent.

"Despite this, our predictions for an overall increase in corporate failures have sadly rung true. The high rise in corporate failures during quarter four of 29.1 per cent was the highest quarterly increase recorded since we started reporting them and has pushed 2006 into the red with an overall increase of 10.7 per cent for the year as a whole."

Experian said that only receiverships declined in 2006, with administration orders, voluntary liquidations, compulsory liquidations and voluntary arrangements all increasing.

The 56.3 per cent annual rise in administration orders follows the implementation of the Enterprise Act 2003 which gives additional breathing space for companies in financial difficulties.

It enables struggling businesses to put measures in place to prevent complete failure, but it has also resulted in an increase in the number of companies falling victim to corporate fraud in which false administration filings are made at Companies House, Experian says.

On a regional basis, only the North East (down 15.2 per cent), the City of London (down 11.9 per cent) and Northern Ireland (down 4.2 per cent) escaped with falls in the number of business failures.

In contrast, Greater London saw failures rise by 29.2 per cent, followed by Wales (up 22.8 per cent) and Scotland (up 16.7 per cent).

The West and East Midlands escaped comparatively lightly, up 6.6 per cent and 7.2 per cent respectively.

Of the 34 industries reviewed by Experian, only 12 recorded a fall in corporate failures in 2006. These include oil (down 91.7 per cent), agriculture, forestry and fishing (down 20.6 per cent), utilities (down 13.9 per cent) and chemicals (down 14.3 per cent).

Business services saw the largest number of failures with 4,202 companies in the sector going to the wall, a rise of 24.6 per cent.
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Publication:The Birmingham Post (England)
Date:Jan 1, 2007
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