Figures released by the Insolvency Service show the number of insolvency cases in the last quarter of 2013 was 3,552, 7.4% lower than the same period the previous year.
However Melanie Giles, a licensed insolvency practitioner at PJG Recovery, said the number of firms trading with large amounts of debt could be denying capital to more worthy firms.
“The sharp drop in compulsory liquidations is a double-edged sword,” she said.
“The banks and other creditors have accepted that compulsory liquidation can be a cumbersome and costly process that rarely achieves a material return.
“Instead, they are playing the long game and letting the zombies operate for as long as possible in order to get what money back they can.
“But not calling in their debts is tying up the banks’ liquidity and so is depriving other companies of the capital they need to grow.
“It’s not the zombies that are rotting but the companies of tomorrow through under-capitalisation.”
In the calendar year 2013, there were 14,982 compulsory liquidations and creditors’ voluntary liquidations in total. This was made up of 3,624 compulsory liquidations and 11,358 creditors’ voluntary liquidations.
