Insolvencies hit record high

By Matt Falloon

LONDON (Reuters) - Nearly 5,000 firms in England and Wales went into liquidation and a record number of people succumbed to insolvency in the first three months of 2009, as the deepening recession claimed more victims.

There has been some very tentative survey evidence of an improvement in the economy following the sharpest drop in output since 1979 at the start of this year, but analysts say many more businesses and individuals are bound to go bust this year.

The Insolvency Service said Friday there were a seasonally-adjusted 4,941 company liquidations in the first three months of the year, up 56 percent compared with the same period last year.

The service also reported a seasonally-adjusted 29,774 personal insolvencies, up 19 percent on year-ago levels and the highest since records began in 1960.

"Unfortunately we are seeing companies with nowhere else to go failing as their backers, realising that they are throwing good money after bad, snap the purse closed," said Richard Fleming, UK Head of Restructuring at KPMG.

"We expect to see the rate of insolvencies gathering pace over the coming months."

British businesses have been slashing jobs and scaling back production in an effort to survive the recession, but slumping demand and an ongoing credit crunch is still making it difficult to fund day-to-day activities and keep up with debt payments.

MORE TO COME