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Company insolvencies drop off

The number of companies going out of business fall quite sharply at the start of 2010, statistics from the Insolvency Service have revealed.

This time last year, we learned that there had been 4,964 company liquidations in England and Wales in the first three months of 2009.

So the figure this year came as a welcome surprise: in the first quarter of 2010, there were 4,082 company liquidations - a full 17.8% fewer.

This was also a drop (of 8.4%) on the final quarter of last year, when there were 4,457 company liquidations.

Looking ahead, however, there`s the risk of worse news in the months - and even years - to come. R3, the insolvency trade body, has warned of the `insolvency lag` - pointing out that insolvencies tend to peak sometime after a recession has finished.

This goes for both corporate insolvencies and personal insolvencies like bankruptcies and IVAs.

`Figures from the 1980s and 1990s recessions show that the peak in both personal and corporate insolvencies occurred after the return to growth, in some cases, a considerable length of time afterwards,` R3`s report The "insolvency lag": risks for 2010 states.

After the 1990s recession, R3 says, company insolvencies peaked two quarters after the end of the recession - but after the 1980s recession, the `peak of the decade` came at the end of 1985.

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