Fewer firms insolvent in London

INSOLVENCIES among London companies dropped by 11% in the final quarter of last year, showing that the capital has weathered the worst of the financial and business downturn.

This is the largest quarterly drop in London insolvencies for more than a year, according to accountants PricewaterhouseCoopers, which compiled the figures based on the number of administration, administrative receivership and creditors' voluntary liquidation appointments made in the capital.

A total of 2,809 companies based in the capital entered insolvency in 2003, a drop of 3% on the previous year. The figure represents three out of every 10 insolvencies in the country.

PwC says the figures also show that last year's Enterprise Act is beginning to be used by companies. Designed to give management greater flexibility in restructuring businesses, it has in particular allowed directors to appoint an administrator without having to go to court.

The use of administration in London, which is a process normally driven by a company's directors rather than its creditors, rose by 118% in the final quarter of 2003.

Mike Jervis, partner in business recovery services at PwC, said: 'Not only are fewer London businesses entering insolvency but those that are struggling appear to have taken full advantage of the UK's new business rescue laws. The result may be an increase in successful business rescues in London but the jury is still out.'

Official national insolvency statistics will be published on Friday.