UK insolvencies

The Insolvency Service said that in the last three months of 2008 there were 2,428 corporate insolvencies such as administrations and receiverships. That was a 220% rise on the same period the year before.

In the same period, 29,444 people were made bankrupt or entered an individual voluntary arrangement (IVA), 19% more than a year ago. Of those, 19,100 were bankruptcies while 10,344 were IVAs.

There were 4,607 firms wound up in England & Wales in the last three months of 2008, 52% more than a year before.

Here's another couple of scary statistics:

1. Over the whole of 2008, the number of firms that were liquidated rose by 24% to 15,535.

That amounted to one in every 150 trading companies.

2. The number of other corporate insolvencies - receiverships, administrations and company voluntary arrangements - rose by 92% to 6,276.

And one scary statistic and and even scarier prediction from the president of the insolvency professionals' trade body R3, Nick O'Reilly:

"What today's figures mean is that in 2008 we saw a staggering 350 people becoming insolvent in the UK every day"

"The outlook is bleak for the next two years, when insolvency practitioners expect to see in excess of 158,000 personal insolvencies annually,"

One of the few growth industries in the UK in 2009/2010 may be that of insolvency practitioners. Does anyone know if you can buy shares in such companies?

Labour party finances

I believe that the Labour party accounts are due to be signed off soon and that there are fears amongst the Labour party that their accountants may feel that they have to "qualify" the accounts. Any qualification would, I presume, be a "going concern" one.

A "going-concern" qualification is an explanatory paragraph that states that the independent auditors have substantial doubts about the ability of the entity being audited to continue to meet its obligations as and when they fall due over the next 12 months.

I have blogged before, querying how long loans to the Labour party can be extended, often with the interest rolled up, before the loans can be deemed to have in fact been donations. More interestingly, the benefits of loaning or donating money to the Labour party are diminishing as the Labour party looks more and more like being on its way out of power within the next 23 months. So will the wealthy individuals who have large loans outstanding to the Labour party now decide that they would like that money back and if so how will the Labour party pay it back? If they cannot pay it back then they are "trading insolvent". Under UK law, if a company is trading insolvent, then the company directors may be liable for wrongful trading. If the director knew or should have known that the company could not avoid becoming insolvent but still continues to trade then he or she must cease to trade immediately and take steps to liquidate the company. Under UK law, trading while insolvent can trigger several provisions under the Insolvency Act 1986 which may have the effect of making directors of a company personally liable to contribute to the assets of a company.

The coming months may be rather interesting ...