Insolvency is not just about the bad times
There is a common misconception that the number of insolvencies increases during an economic recession and falls when there is economic growth. Insolvency practitioners themselves, however, will not be surprised to hear that both Insolvency Service and Companies House figures show that the number of insolvencies in the first quarter of 2015 has actually fallen by 11% compared to the same period last year, despite growth of 0.4% and 0.7% in the last two quarters.
Rapid economic growth can, and historically often does, lead to an increase in corporate insolvencies as businesses look to take more risks and the risks attached with overtrading become more prominent.
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