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Company insolvency can be disastrous not just for the business itself, but also for its creditors – which is why corporate recovery under the assistance of insolvency experts is a much more preferable outcome.

In the event that corporate recovery is impossible, company insolvency often involves disposing of the business’s assets at the best possible price, in an attempt to pay off as much as possible of what is owed to creditors.

But exactly how much is owed to creditors each year by insolvent companies? Business recovery trade association R3 has tried to put a figure on this – but while relevant data is collected by the government, it is never published in full.

As such, R3’s estimates are based on the partial data that is available, such as the £4 billion that goes unpaid to HMRC each year, largely due to insolvencies, and an OFT report dating back to 2010 that says this accounts for about a quarter of the unsecured debt in insolvencies.

That adds up to a figure of around £16 billion of unsecured debt, although this does not include secured loans such as mortgages, or the portion of outstanding debt that ultimately is successfully paid through insolvency procedures.

In addition to the money owed by insolvent businesses, there are also debts owed by insolvent individuals to consider too – the latest R3 Business Distress Index found that 6% of all UK companies were owed money in 2015 by an insolvent individual or organisation, around 113,000 firms nationwide.

“Our own research into the value of the insolvency profession found that in 2014-15, the insolvency profession started work on personal insolvency cases that will repay around £5bn to creditors in the next five years,” R3 stated.

But the organisation added that 2016 is likely to “bring a range of challenges to the economy”, and said it is down to the insolvency profession to make sure that as much as possible is paid to creditors when a business or individual enters insolvency with debts outstanding.