With financial markets faltering and fears of a global economic
recession intensifying, the international list of companies becoming insolvent
is growing

In England and Wales alone, there were over 3,500 compulsory
and voluntary liquidations in the second quarter of this year.

As Jane Grieve reports, that figure is set to spike in the third quarter
and beyond as companies find it increasingly difficult to meet financial
obligations.

Poor trading, defaults on payments, declines in sales - all elements that
have come to characterize life for many companies.

But for some, the situation is much more critical. Company insolvencies in
the UK rose 15 percent year on year in the second quarter and those who track
insolvency say the statistics will escalate.

PKF partner Philip Long sits on the council of R3, which is an association
representing insolvency practitioners.

He says R3 is predicting another 10-15 percent rise in insolvencies in the
third quarter but that what we're seeing is just the tip of the iceberg.

PKF, Partner, Philip Long, saying;
"There are a lot of ways of looking at this recession. Some people
have said that in terms of a sporting event, we've probably just heard the
anthems being sung. So there are a lot of problems to come."

While companies like Bear Stearns and Lehman Brothers have collapsed,
Philip Long says people must be careful not to confuse the liquidity crisis
with recession.
While the liquidity crisis with banks has played heavily in the news, he
says it's the recession that is going to bite into UK manufacturing in the
same way it has the property market in recent months. In fact he says no
sector is immune.

PKF, Partner, Philip Long, saying ;
"We're even seeing problems in the football sector at the moment
where some of the collapses have led to the loss of sponsorship, the loss of
corporate sponsorship so it's right across the piste."

Bank of America now predicts the UK to lapses into mild recession with
possible falls in GDP in the next 3 quarters
The Bank's UK economist Matthew Sharratt says the overall economic impact
on companies will be severe.

Bank of America, UK Economist, Matthew Sharratt, saying ;
"They are going to be hard pressed to engage in activity with
falling domestic and foreign demand so we expect them to come under increasing
pressure. The turmoil that we've seen in financial markets is an additional
stress for them and we're likely to see a big spike in insolvencies as we go
forward."

And with a sharp rise in unemployment and a reduction in consumer spending,
it seems there's a long road ahead to economic repair.

Jane Grieve, Reuters.