Many companies could face insolvency in early stages of recovery
Based on previous post-recession trends, the Association of Business Recovery Professionals (R3) has warned that many companies could face insolvency during the early stages of recovery from recession, the Telegraph reports.
Figures from the 1980s and 1990s recessions show that in general, the ‘early recovery period is one of the most dangerous times for businesses and individuals’. On both occasions, personal and corporate insolvencies have peaked substantially after the return to growth.
Research by the insolvency trade body reveals that in the early 1990s, the peak in the number of corporate liquidations came five quarters after the return to growth – while the peak for personal insolvencies came ‘a full 18 months later’.
An IVA expert for the IVA Forum commented: “The warning from R3 suggests that we may see a delayed rise in the number of personal insolvencies – including bankruptcies, IVAs and Debt Relief Orders – after the recession.”
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