There has been a sharp increase in the number of companies going into liquidation according to government figures released today.
An increase of 11.6% on the first quarter, saw almost 3,500 companies go into liquidation between April and June, a 15% rise from the same period a year ago.
The number of insolvencies remains less than half of the figure reached during the recession of the early nineties, but a rise in the number of companies going into administration suggests that there is more pain to come.
Over 1500 companies were put into administration in the first half of this year, an increase of 42% on the same period last year.
“Unfortunately, this feels like just the beginning,” Nick Wood, Recovery and Reorganisation Partner with Grant Thornton, “The negative sentiment expressed in a huge range of economic indicators is now feeding through to the real economy, with businesses that a year ago had been able to paper over the cracks now being fully exposed.”
“Expect private equity to begin rescuing businesses with strong fundamentals but short term cash flow difficulties - as long as the price is right. Well managed businesses with strong cash flows can certainly survive, and even prosper in the current climate. Cash is king in these turbulent times.”
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