Insolvencies Set To Soar in 2008
A bumper year for insolvencies is on the cards, with higher numbers of companies and individuals throwing in the towel, Financial Mail has learned.The credit crunch, sluggish High Street spending and a 'quickie' personal insolvency regime will produce a sharp rise in numbers seeking legal protection from their debts.
Nick O'Reilly, head of business recovery at accountant Vantis, said: 'In the past two or three years a lot of businesses have survived because they refinanced.
'These are businesses that normally ought to have fallen over. But refinancing is no longer an available option.'
O'Reilly, president elect of the insolvency practitioners' professional body, R3, added that personal insolvencies were also likely to soar.
A change in the law from October will make it easier for people to enter individual voluntary arrangements (IVAs), an alternative to bankruptcy in which debtors repay some of what they owe with the rest written off.
The simplified IVAs (SIVAs) will reduce creditors' power to block an arrangement. One senior insolvency source suggested the new regime could cause the number of IVAs to rise from about 50,000 a year to 100,000.
Fourth-quarter figures for insolvencies are due on Friday.
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