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Pre-recession low for company and personal insolvencies

Company and personal insolvencies in England and Wales fell in the first quarter of the year reaching their lowest levels since before the financial crisis, official figures have shown.

Total company insolvencies hit their lowest level since the end of 2007, while personal insolvencies have fallen to their lowest level in a decade, but practitioners believe insolvency levels could rise over the next two years if interest rates start to rise.

Fatally weakened companies ‘exist’

Brian Johnson, insolvency partner at HW Fisher, raised concerns an army of so-called ‘zombie companies’ – which are essentially dead but continue to survive  thanks to low interest rates and bank forbearance – that will never recover.

“With deflation and a further period of ultra-low interest rates on the cards, many of Britain’s weakest companies will limp on for some time yet. But the fall in corporate insolvencies shows only that fewer companies have gone to the wall – and tells us little about how many more fatally weakened firms are lurching towards it,” he said.

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