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Business debt judgments hit record low but corporate insolvencies rise

By CreditMan Thursday, May 8, 2014

The number of county court judgments recorded against businesses in England and Wales fell to a new first quarter low according to the most recent statistics from Registry Trust. The results were tempered, however, by the latest figures released by the Insolvency Service, which recorded a five percent rise in company liquidations.

Registry Trust is the non profit organisation which collects judgment information from jurisdictions across the British Isles and Ireland. In England and Wales it runs the Register of Judgments, Orders and Fines for the Ministry of Justice, which includes county court and high court information. All judgment records are made available for the public to search at www.trustonline.org.uk. A judgment record held against a business or individual shows failure to pay and can therefore serve as a simple indicator of creditworthiness.

There were 27,909 county court judgments (CCJs) against businesses in the first quarter of 2014, down six percent compared with the previous first quarter low recorded in 2013. This is only the second time that the total number of first quarter business CCJs has fallen beneath the 30,000 mark since the turn of the century.

While the figures will be welcomed by businesses across England and Wales, major areas of concern remain. Statistics released recently by the Insolvency Service show a 4.9 percent year on year increase in company liquidations between the first quarters of 2013 and 2014. There were 3,721 liquidations in Q1 2014, compared with 3,547 in Q1 2013 and 3,552 in Q4 2013.

Introducing the statistics, Trust chairman Malcolm Hurlston CBE said: “By any interpretation the record low in business judgments presents a positive picture. It may have been helped by more forbearance from lenders or reflect cautious lending in the aftermath of the crisis.”

The downwards trend in debt judgments applies to both incorporated businesses and their smaller, unincorporated counterparts. The number of CCJs recorded against the former fell five percent year on year to 16,015 in the first quarter of 2014, while the equivalent figure for unincorporated businesses fell seven percent to 11,894.

The combined value of business CCJs in England and Wales also continues to fall, decreasing a further 18 percent year on year to reach £105.2m in Q1 2014. This compares with the £290.8m peak sum recorded in the first quarter of 2009.

In contrast, the number and value of judgments against businesses in the High Court for England and Wales increased year on year, although figures for this type of judgment tend to vary significantly owing to their relatively small number and the larger sums involved. There were 74 high court judgments against businesses in Q1 2014, compared with 47 in the same period last year and a previous first quarter high - also numbering 74 - in Q1 2011. The value of high court judgments against businesses more than doubled year on year to £42.5m in the first quarter of 2014, making a grand total for the quarter of £147.7m for business judgments in all courts.

In the first quarter of 2014 Registry Trust received 40,748 search requests in England and Wales, the bulk of which are made online via www.trustonline.org.uk.