Merseyside bankruptcy cases increase by 77%

Aug 16 2008 by David Bartlett, Liverpool Daily Post

FRESH evidence of the credit crunch biting in Liverpool emerged last night as latest figures showed the city had the highest increase in bankruptcies in England and Wales last quarter.

According to the latest statistics, 354 people sought to declare themselves bankrupt at Liverpool County Court between April and June – an increase of 77% on the same quarter for 2007.

There were 102 petitions to wind up companies – an increase of 38% – and 154 bankruptcy petitions by companies seeking to recover money from individuals, a rise of 47%.

Last night, the statistics were described as “disturbing information” by a Merseyside MP, while a leading economist warned the “pain” was set to continue for a number of months.

Liverpool Chamber of Commerce said there had been some high-profile failures in recent months, including Ethel Austin and Cains brewery, but most sectors had performed well, including local retail, which is bucking the national trend by exhibiting growth.

Peter Stoney, honorary senior fellow at the University of Liverpool’s management school, said: “It is a sign of the current economic conditions, a symptom of the current malaise, and it’s not going to disappear suddenly.

“Banks have been making a pig’s ear of things for the past 12 months, and bankruptcies are the inevitable consequence of over-lending by the banks.

“The figures are not unexpected, there is going to be some pain at the moment.”

He said the forecasting group he is part of was predicting that Merseyside and the UK will avoid a recession, which is classified as two consecutive quarters of negative growth.

He said the price of gold was starting to fall – an indicator that the economic climate was changing for the better.

“Things will turn around, but there is going to be a degree of pain in the process.”

The number of bankruptcies at Liverpool County Court, which takes in cases from across Merseyside, was well above the average for England and Wales.

In the second quarter, a total of 13,533 people in the UK attempted to declare themselves bankrupt, a figure roughly equal to the same period last year.

There were 2,927 company winding-up petitions – an increase of 11 – and there was an 18% rise in bankruptcy petitions by companies seeking to recover money from individuals, all well below the Merseyside figures.

In a sign of the worsening economic climate, the increase in those seeking to declare themselves bankrupt in Liverpool was 53% higher than in the first quarter.

Jack Stopforth, chief executive of Liverpool Chamber of Commerce, said: “Companies are obviously finding it harder to fund their operations.

“While these latest figures are worrying, they do not confirm a trend, since previous months showed only limited impact on local businesses.

“Most sectors appear to be managing business and cashflow to keep failures under control.

“We believe that there are local factors that provide at least some short term insulation against the worst of the credit crunch.

“The huge capital expenditure in the city’s commercial and retail core is now translating into revenue from commercial tenants, shoppers and tourists.”

Last night, Liverpool Riverside MP Louise Ellman said: “She said it was understandable that people were anxious about the credit crunch, which the Government was trying to address.

“It’s very difficult to confirm any trends on the basis of one set of figures, but this is disturbing information.

“In the current state, banks and financial institutions have to act responsibly, they should make sure they look at long-term prospects.

“We do have many highly successful businesses and people should not become despondent as there is a great deal to celebrate.

“We have got new businesses, and there is confidence in the city shown by the successful retail sector.”

OPINION: PAGE 6

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