Large increase in unpaid debt and insolvencies in North

The number of County Court Judgements (CCJ) against companies in the North for the recovery of unpaid debt has increased significantly, it has been revealed today.

In December 2008, there was an increase of 48% in CCJs compared to December 2007, according to figures from ICC Information Group Ltd. However, there was a 28% decrease in CCJ activity between November and December 2008.

Overall UK Figures reveal that the number of CCJ in December 2008 increased by 88% compared to December 2007, from 3,633 to 6,826. The total value of judgements in December 2008 was £36.7m (€39.5m).

“Every Region in the UK encountered an increase of more than 30% in the year on year comparison, and so Northern Ireland is sharing the pain the rest of the UK are feeling,” said Jane Sweeney, manager of ICC Information.

“CCJs against companies are a useful barometer of corporate financial health and a leading indicator of insolvencies. As we enter more challenging times it is important to understand the credit history of companies you are dealing with and therefore decreasing your probability of incurring bad debt.”

The number of insolvencies are also on the rise in the North, increasing by 38% in a year-on-year monthly comparison from December 2007 to December 2008.

There were 22 insolvencies alone in December 2008 in the North. The number of insolvencies in Northern Ireland decreased from November to December 2008, however, Belfast saw a monthly increase of 56% in insolvencies during this period.

Overall UK figures reveal that the sectors hardest hit were Building & Construction with an increase of 109% as well as Property with 99%, followed by Retail with 90%.

“The recent collapse of company sales, cash flow problems and high levels of company debt are the key drivers of corporate insolvencies currently in the UK,” said Sweeney.

“The fall in interest rates and the reduction in the value of sterling have alleviated the pressures on some companies, but these potential benefits are offset by the sudden collapse of bank lending and falling operating profits in a highly leveraged corporate sector.

“As we enter more challenging times it is important to understand exactly who you should be extending credit to and therefore decreasing your probability of incurring bad debt.”