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Q4 2011 Insolvency Service corporate and personal insolvency stats R3 comment

Frances Coulson, R3 President, comments on the Insolvency Service statistic for Q4 2011

Corporate insolvency increases:

“The increase in corporate insolvencies is unsurprising given the challenging economic environment that businesses are operating in. We have known for a while that many businesses are surviving but not thriving, operating as ‘zombies’ and eventually some would have to fail.

“What is still clear however is that insolvency numbers are historically low compared to previous recessions and we have not seen volume of business failures that one would expect. This is certainly the calm before the storm and in fact if the economy is to recover, we must see some businesses fail, to allow viable ones to thrive.

“2012 is set to be a very difficult year and recent research by R3 indicates that SMEs, which are vital to the economic recovery, are going to need more support. In the final quarter of 2011, 29% of SMEs were experiencing a reduction on sales volumes, compared to only 6% of large businesses.”

Personal insolvency decreases:

“The decrease in personal insolvencies does not necessarily indicate that individuals are better at dealing with their personal finances, rather that we are seeing the emergence of ‘zombie’ debtors. Research carried out by R3 in November 2011 found that these individuals are able to stave of formal insolvency by servicing their debt, but not actually reducing it (16%). This indicates that many people are just hanging on, but with wages remaining stagnant and utility bills rising, many will not be able to cope for much longer.

Further more, what the official figures do not show are the number of people in informal debt procedures. We estimate that some 500,000 are in a Debt Management Plan and there are many more who are struggling without any help at all.

“We have every reason to believe that 2012 is going to be tougher than 2011 and so those who are struggling with their personal finances, should seek advice now to prevent it becoming insurmountable.”

For further information please contact:

Will Black, Communications Manager

T: 020 7566 4215  m: 07917 422 485  e:

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.