Southampton: R3 survey shows insolvency industry saves jobs and businesses

Engaging with insolvency practitioners (IPs) does not necessarily signal the end of a business. This is according to new findings by ComRes on behalf of R3, the trade body for insolvency professionals, which show that the UK insolvency industry is estimated to have saved more than 750,000 jobs and 6,000 businesses in 2012. 

The ComRes’ analysis of the insolvency industry found that in 45% of cases, the businesses advised by IPs avoided full closure. Of those in formal insolvency procedures, 27% continued in some form. This comes against a background of falling corporate insolvency numbers, down 11% from 2009.

Southampton insolvency expert James Stares, southern regional chair of R3 and director at Grant Thornton in Southampton, commented: “The insolvency profession may seem at first glance an unlikely saviour of businesses and jobs, but a struggling business may well survive in some form, and I am heartened by the high numbers of jobs saved and the contribution that is making to the UK economy.

“The findings also highlight that practitioner work involves advising a business pre-insolvency or restructuring, which is often overlooked."

The total number of business insolvency cases in the UK stood at 17,819 in 2006, and peaked at 25,432 in 2009, but has since declined by 11% to 22,590 for 2012.

Stares added: “It may not feel like it with the succession of high-profile retail collapses earlier this year – but business failure has been on the decrease since 2009. This is good news for businesses struggling through a very slow recovery. The picture could alter if asset values increase and interest rates go up, perhaps pushing insolvency numbers up as happened in previous recessions. However, if struggling business owners take action now, the outcome for them is likely to be far better.

“In the meantime, these findings show that, though minor changes could be beneficial, the UK’s insolvency regime is broadly working well. This is backed up by favourable comparisons to other international insolvency regimes.”