Blog

Business Sale Report Reveals Fewer “Zombie” Businesses Going Under

February 5th, 2013 by Chris St Cartmail

Business Sale Report reveals that the number of “distressed” companies in the UK were significantly less in 2012 when compare to the previous year. Figures of winding-up petitions from the Business Sale Report, together with the latest statistics from the Insolvency Service on companies falling into administration and receivership both indicate a fall and subsequent levelling off of businesses in financial distress. These key indicators represent green shoots for the economy.

Insolvent businesses in the UK

London, United Kingdom, February 05, 2013 — Latest figures from the Business Sale Report reveal a 36 per cent drop in UK company winding-up petitions in the last quarter of 2012, with 1,317 recorded in the period, as compared to the 2,063 recorded in the last quarter of 2011.

The decreasing trend continued throughout 2012 with 3,915 winding-up petitions in the first half of 2012 dropping to 2,774 in the second half (a decline of 29 per cent). These figures suggest green shoots of recovery are in sight for the UK economy as winding-up petitions are one of the key indicators of the level of corporate distress.

The Business Sale Report provides comprehensive information on distressed business activity in the UK including businesses in administration, liquidation and early stage insolvency. Stephen Ideh, head of intelligence at the company, commented on the data: “The drop in insolvencies is obviously a promising sign for the economy. However, since the end of 2012 some high profile businesses have already collapsed, so while it’s clear that things are looking up, we’re not out of the woods yet.”

The drop in winding-up petitions is mirrored by the official data from the Insolvency Service. Between the first and third quarters of the year, the service saw receiverships and administrations fall from 1,115 to 825. Meanwhile, the data for the final three months of the year showed 856 insolvencies, a slight increase on the third quarter. The Business Sale Report suggested that this blip signals the last die-off before the end of the recession and is a necessary evil in allowing for the development of healthy new business.

Consumer-facing sectors are likely to bear the brunt and could well face difficulties for some time to come. But the data suggests that for many sectors the recession is bottoming out with a net reduction in zombie’ companies hitting the wall as their short-term finance options run out.

Mr Ideh added: “We’re still seeing outdated and inefficient businesses collapse as their creditors finally bail. It’s clear to us that the UK economy is at a turning point and we expect to see wise business buyers take over the last dregs of the recession and lead the new trend towards economic growth.”

*******************************************************************************************

For up-to-date information about winding-up petitions, click here

For current data about businesses in administration in the UK, click here