100,000 Businesses Owed Money by Insolvent Companies & Individuals

Figures have been released which show that 113,000 businesses, which represents about 6% of all UK companies, were creditors in an insolvency procedure during 2015. Medium-sized firms were the hardest hit with a figure of around 14%. This is credited to a growing business taking on new risky customers without performing proper due diligence as well as a lack of internal controls to monitor exposure. The figures also reveal that smaller businesses were the most likely to be hit by multiple insolvent customers, potentially due to the difficulty in smaller firms investing the necessary resources in controlling credit.

In any insolvency, the order of repayment of debts is governed by law. Parties with security (often banks) are paid out first whilst those without security such as trade creditors rank lower down. With these companies unlikely to receive back the full sum due to them, this can have a detrimental impact on their own financial performance.

Should you or your business have been in the unfortunate situation of being a creditor in an insolvency process of a major customer, then it may be appropriate to seek professional advice. With over 20 years’ experience of insolvency, Elwell Watchorn Saxton can provide advice to creditors in relation to their rights in the insolvency of their customer or even discuss the options available in relation to your own company finances. One of our experienced practitioners would be more than happy to arrange a meeting, initially free of charge. To take advantage of our service, please contact us.