A recent fall in the number of businesses being placed into
liquidation could actually be bad news for creditors, according to
experts in the field.
Birmingham and Coventry-based insolvency firm Poppleton &
Appleby has warned that suppliers, landlords and other creditors
could be left out of pocket by a worrying new trend.
The firm has analysed recent figures which show struggling small
businesses are shutting up shop rather than filing for bankruptcy
or placing the company into liquidation and facing the costs of
insolvency.
Recent statistics show the number of company failures this year
has fallen by around five per cent on the numbers for the previous
year.
Andy Turpin, Partner at Poppleton & Appleby, said: "This
would appear to be good news but the costs of insolvency is
deterring firms from seeking help or entering insolvency
proceedings.
"Firms are instead simply ceasing to trade which can leave
suppliers and other creditors severely out of pocket - often with
serious consequences for their own businesses.
"In many cases we see there would have been the opportunity to
save an ailing business if the correct steps and expert advice were
taken at an earlier stage."
According to Turpin the firm, which has offices in Ludgate Hill,
Birmingham, and Manor Road, Coventry, has uncovered other
potentially disturbing reasons for a fall in the insolvency
figures.
"Another reason we are seeing a fall in the number of businesses
seeking to begin insolvency proceedings is that owners are waiting
until a creditor petitions to wind up the business," he said.
"In other cases we have seen people holding out by failing to
file accounts for many years until a business is struck off the
register.
"Both of these approaches effectively postpone the inevitable or
mask the real problems and produce insolvency figures which do not
tell the whole story."