ALTHOUGH it seems fair to say that some sectors of the local economy are in a much better position than they were a year ago, trading for some businesses still remains very difficult.

This is especially the case for those which are heavily reliant, directly or indirectly, on the public sector.

In such times you would expect the number of corporate insolvencies to have increased. However, the opposite is true, particularly in the North.

According to recent figures from Experian, corporate insolvencies fell overall by 10% in January, with Yorkshire seeing the biggest fall with a recorded reduction of 53%.

Nationwide, the health and household business services sector suffered the highest number of business failures in January, with 299 in total.

Building and construction was next with 205, followed by the leisure and hotels industry with 101. The highest number of insolvencies continued to emerge in companies with the fewest number of employees.

One possible explanation for the reduction in corporate insolvencies is that there may be issues in some businesses which have yet to come to the fore.

In previous recessions, where asset values were higher, banks were much more likely to use formal insolvency procedures to recover their debts.

However, as a result of the levels of bank debt in certain businesses, coupled with reducing property prices, some banks have found that they have now lent more than they could expect to recover following a formal insolvency process.

In such circumstances, banks may look to avoid such procedures and, instead, allow a business to continue trading to try to reduce the level of its borrowings.

For businesses experiencing difficulties, there are options available. Often, solutions to revive businesses can be found which cannot be implemented later down the line.

The threat of personal liability if directors ignore their duty of care to creditors when they notice signs of distress makes it even more important to seek corporate recovery advice at the earliest opportunity.

In almost all cases, businesses facing tough times will benefit in taking professional advice.

:: Craig Swinhoe is a partner in the corporate finance team at Muckle, Newcastle