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When the headline hides the story – a blog by Philip King

14 February 2014

The insolvency statistics for q4 2013 were published last week and they showed some encouraging signs. Both corporate and individual insolvencies were down year on year for the corresponding quarter and for the year as a whole. I’m not going to repeat my oft-quoted prediction (in my blogs and elsewhere) that there is a surge of corporate insolvencies still to hit us as the recovery in the economy picks up and the worst zombie companies lose the battle for survival. Suffice to say I still believe (unfortunately) I’ll be proved right.

The headline statistics mask two significant elements. Firstly, although most forms of corporate insolvency decreased, there were almost 100 more administrations in q4 than there had been in q3. I wonder if that means we’re seeing an increase in pre-packs? I don’t subscribe to the view that all pre-packs are bad but, if the numbers are increasing, it’s a worrying trend.

Secondly, the personal insolvency numbers still take no account of Debt Management Plans. Until they do, we really don’t know the scale of personal insolvency nor whether the trend is genuinely up or down. We do know that the debt advice sector doesn’t seem to be seeing a contraction in demand (as we heard in this week’s ICM Think Tank) so it’s reasonable to assume that personal over-indebtedness remains a serious problem. The need for good advice is as great as ever.

I’m writing this on the morning of the ICM British Credit Awards. I’m looking forward to a great night of celebration and networking, and congratulations to all the winners and finalists for their achievement. By the time this blog is published on the ICM’s website, pictures of the night will have been uploaded. Click here to see them.

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