Insolvencies Reach Record High

(Reuters) – MORE THAN FIVE THOUSAND companies in England and Wales went into liquidation in the second quarter of this year, and a record number of people succumbed to insolvency, official figures showed today.

The Insolvency Service said company liquidations rose 39.1% on a year ago to 5,055. Personal insolvencies rose 27.4% on a year ago to 33,073, the highest since records began in 1960.

Britain’s economy contracted sharply in the first half of the year and while surveys are pointing to a tentative recovery, analysts said the rate of insolvencies would continue to rise.

The number of Britons out of work rose by 281,000 in the three months to May, the biggest quarterly increase since records began in 1971, taking the jobless rate to 7.6%, its highest in more than a decade.

Some labour market experts predict the jobless rate could top 10% before long.

Andrew MacCallum, managing director at restructuring firm Alvarez and Marsal, said corporate insolvencies were unlikely to peak until the end of 2010.

‘Credit is still tight and many businesses are loaded with debt that they cannot service,’ he said.

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