Levels of corporate insolvency have remained relatively steady for the last few years, but that is about to change, according to insolvency trade body R3 – The Association of Business Recovery Professionals.

Government statistics, released on Friday, may show a rise in the number of company administrations and liquidations, with certain industries suffering the most as the result of turbulent conditions in the UK. Travel, tourism and agriculture could be the worst hit. The figure looks certain to rise in quarters one and two of 2008.

R3 Council member Peter Sargent from Yorkshire says, “I have heard on the grape vine that things are starting to change in the leisure and tourism industry. A good example of this is a wine stockist who says that, although the quantity of wine bought by restaurants has not changed, the quality has, so his customers seem to be going for the cheaper options.”

It is likely that smaller businesses will be the first to suffer, as in many cases the owners or backers have loans backed by personal guarantee. If either the individual or company find themselves in financial difficulty, one will have a knock on effect on the other. On top of this credit is becoming harder to obtain with smaller companies particularly vulnerable.

Peter added, “As soon as a business starts to have financial difficulties they should seek expert advice. Problems can be overcome if recognised and tackled early, but often people wait until it is too late, and the business has to be sold or liquidated."

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Young people are shouldering the highest level of unsecured debt in Britain, according to a new survey. Those aged 18-24 have unsecured debt of £20,396 – more than double the national average of £9,455 for all age groups. But they earn less than the national average wage - £20,396 against £30,508.

The findings were part of a national survey on debt carried out by R3, the Association of Business Recovery Professionals - an organisation which represents 97% of Insolvency Practitioners in the UK.

Patricia Godfrey, President of R3 said, “It is extremely worrying that our young people are so much in debt. Our survey sowed that in many cases they leave university in debt and struggle to pay it off even years later.”

Over half the people aged 18-24 said that student debt was part of the reason for their debt and over a third of those aged 25-34 said the same. Paying for specific items, such as cars and holidays was high on the list of reasons for debt build up, as well as overspending, unemployment and redundancy.

Six per cent of young people say their debt is causing them great difficulties and 1% say it is unmanageable.

Patricia Godfrey added: “It is clear that long before they go to university, young people need to understand the implications of taking on too much credit. This is why R3 is working with the IFS School of Finance to send some of our Insolvency Practitioners in to schools, with specially designed classroom exercises designed to educate children about the pitfalls of debt.”

R3’s members will be supporting the IFS School of Finance qualifications on Financial Capability from the next school term in September 2007.

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Responding to claims from Northern Rock that their recent surge in bad debts is a consequence of debtors being put into unsuitable IVAs, Nick O’Reilly, Vice President of R3- The Association of Business Recovery Professionals- said:

‘I find it staggering that Northern Rock are seeking to lay the blame for their poor lending decisions at the door of IVA providers. Insolvency Practitioners don’t lend the money and they don’t spend it. They offer a solution to help people sort out their debt problems.

Insolvency Practitioners who oversee IVAs are highly regulated professionals who do not, as a matter or course, recommend solutions to debtors which would be unsuitable. I will be writing to Northern Rock asking for evidence of their claims that 9 out of 10 people have been recommended IVAs that are not in their interests’

An IVA (Individual Voluntary Agreement) is a statutory measure which allows debtors to put a proposal to their creditors for final satisfaction of their debts. IVAs require creditors to freeze the interest on debt, stop harassment from creditors and their agents and unusually mean that debtors can keep their homes.

Nick continued:

“What is most worrying, from R3’s perspective, is that blanket refusals of IVAs will mean that more people are forced into bankruptcy- and that means the loss of the family home for debtors or debt management plans which don’t freeze interest and can last for years longer than an IVA. Forcing debtors to choose between a roof over their head or a lifetime of slaving to pay back debt is deeply unfair”

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