Third of firms risking insolvency by using maximum overdraft

Posted 11/05/2012

Up to a third of companies in the UK could be at risk of being declared insolvent as they are using the full amount of their maximum bank overdraft.According to research by insolvency trade body R3, this is a steep rise from the 17 per cent figure that was recorded in the last quarter and is the highest it has been in a year.President of the body Lee Manning stated despite the high level of firms in debt with their banks, there have not been the number of insolvencies that would have been expected.”This could be down to a number of factors but will certainly have been influenced by a shift in creditor attitudes,” he said.Mr Manning pointed out confidence among companies in the UK is at rock bottom at the moment, while consumers do not have much spending power.R3 also recently warned firms in financial danger to stay away from short-term high interest loans.Posted by Luke Hibbert