The recession is forcing more firms out of business
There has been a huge rise in the number of firms going bust in England and Wales because of the recession.
The Insolvency Service said that in the last three months of 2008 there were 2,428 corporate insolvencies such as administrations and receiverships.
That was a 220% rise on the same period the year before.
In the same period, 29,444 people were made bankrupt or entered an individual voluntary arrangement (IVA), 19% more than a year ago.
Of those, 19,100 were bankruptcies while 10,344 were IVAs.
Corporate liquidations, the end stage of the insolvency process, also rose strongly, with 4,607 firms being wound up in England & Wales in the last three months of 2008, 52% more than a year before.
The figures from the Insolvency Service highlight the toll that has been taken on companies by the rapid lurch into recession.
We are now seeing victims of the recession - professionals, traders, contractors and people who have been laid off - not just people who have overspent on a credit card
"For corporate insolvencies, this is almost a direct consequence of the economic downturn," said Pat Boyden, an insolvency expert at accountants PwC.
Over the whole of 2008, the number of firms that were liquidated rose by 24% to 15,535.
That amounted to one in every 150 trading companies.
"Liquidations in the fourth quarter of 2008 were dramatically up on liquidations in the same quarter of the previous year," said Alan Tomlinson of Tomlinsons, a licensed insolvency practitioner.
"It is the small and medium-sized business, which forms the backbone of the UK economy, that has suffered the most and I expect this situation to deteriorate even further in 2009," he added.
The number of other corporate insolvencies - receiverships, administrations and company voluntary arrangements - also shot up, rising by 92% to 6,276.
The number of people who were declared insolvent stood at 106,544 in England and Wales, was roughly the same as in 2007.
FORMS OF INSOLVENCY
Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditors
Individual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of years
Debt Relief Orders: Planned for introduction in April 2009, these should allow consumers with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy
But within that, the number of bankruptcies reached a record level, both for a year and a quarter.
"We are now seeing victims of the recession - professionals, traders, contractors and people who have been laid off - not just people who have overspent on a credit card," said Mr Boyden.
"I think bankruptcies will go much higher in 2009," he added.
He explained that it was now more difficult to arrange an IVA, as the recession meant that people in financial trouble were less likely to be able to offer their creditors some repayments.
As a result, more people on the verge of insolvency are likely to go directly into bankruptcy.
"What today's figures mean is that in 2008 we saw a staggering 350 people becoming insolvent in the UK every day," said Nick O'Reilly, president of the insolvency professionals' trade body R3.
"The outlook is bleak for the next two years, when insolvency practitioners expect to see in excess of 158,000 personal insolvencies annually," he said.