More Northern Ireland firms are going bust than at any time during the last 10 years, it has been claimed.
Business advisers, PricewaterhouseCoopers revealed that 57 companies became insolvent in the first quarter of 2009, 35% up on the same period last year.
It followed a record 209 companies collapsing in 2008, 27% up on 2007 and the highest level of insolvencies for a decade.
The greatest increase in the first quarter of 2009 was in creditors’ voluntary liquidations (CVL), up from five in 2008 to 23 in 2009, while compulsory liquidations (CLs) fell by 8%, with 34 companies liquidated on the orders of the court, down from 37 compared to the first quarter of 2008. PwC Business Recovery Services partner Garth Calow warned the situation was becomingly steadily worse.
He said: “Although a 35% increase in business failures for the first quarter is below the overall UK increase, there is a clear upward trend in local insolvencies. The past six years has seen the level of insolvencies in Quarter 2 (April to June), well above those of Q1, with last year’s Q2, 35% up on the preceding three months.
“Given the prevailing economic climate and the correction in the local property market, there is every reason to suppose that the situation will continue to deteriorate over the current quarter.
“In the UK nearly 5,500 businesses became insolvent in the first quarter, a 57% increase on the same period in 2008.”
Warning that the growing number of business failures was creating real problems for pension fund trustees and for workers in companies with substantial pension fund deficits, PwC said that many pension schemes within insolvent companies relied on the Pension Protection Fund (PPF) to provide benefits to members.
The level of PPF benefits could be substantially below that which members were expecting and pension scheme trustees he warned, must be vigilant in determining the level of security provided to the pension schemes by the sponsoring employer.