Poor management responsible for more than half of corporate insolvencies

According to new research, poor management is to blame for more than half of corporate insolvencies.

A poll of insolvency experts, carried out by the R3 trade body, has discovered that 56 per cent of insolvencies are caused by the ‘incompetence or bad management’ of company directors.

The president of R3, Steven Law, explained that sound management techniques are vital to safeguard a company’s future. He said, “Regardless of the economic circumstance, no business will survive with poor management in place. I have seen a good workforce let down and sometimes laid off due to management which do not admit and correct their mistakes.”

The poll also established that 40 per cent of insolvencies could be prevented if advice was sought sooner, while 60 per of practitioners believe that the insolvency regime in the UK is actually overly forgiving towards failing directors.

However, even if a firm does become insolvent, all is not lost, claim the experts. Some 74 per cent of those questioned believe that failure can actually lead a director to be more driven next time they buy a company or launch their own new company.

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