Statistics published by the Insolvency Service (IS) show that both corporate and individual rates of insolvency fell sharply during the first quarter of the year, with levels dropping well below those reported 12 months ago.

There were 3,619 compulsory liquidations and creditors' voluntary liquidations in total in England and Wales in Q1 2013, a decrease of 5.3% on the previous quarter and 15.8% less than in Q1 2012.

Additionally, there were 935 other corporate insolvencies in the same period, a decrease of 27.5% on the previous year. Insolvency rates in the retail industry were cut by almost half (47%), while appointments in the property sector reduced by 38%, compared with Q1 2012.

Mike Jervis, business recovery partner at PwC, said: 'Corporate failures at such low levels- particularly of administrations- have not been seen since 2005 and before. This is in spite of the many high profile retail casualties that collapsed during the first quarter. Reading between the lines with these numbers, it shows that stakeholders are supportive of companies in distress and are willing to consider non-insolvency solutions.'

In its analysis of the drop in retail administrations, KPMG cautioned that some retailers may now be operating as 'zombie' companies, unable to do more than service existing debts, and at risk of insolvency at a later date.

Richard Fleming, UK head of restructuring at KPMG, said: 'Today's numbers may well suggest that we have reached the bottom of the market, but market fundamentals such as the shift away from large property portfolios to internet sales mean that many companies, while not on the brink of failure, may well be operating under "zombie" conditions, unable to access the finance they need to right size their business models and make the necessary investments in systems needed for the new multichannel trading environment.'

IS statistics also reveal a fall in individual insolvencies in England and Wales, which totalled 25,006 in Q1 2013, a drop of 12.9% on the same period a year ago.

Matthew Chadwick, business restructuring partner at BDO, said the figures 'continue to defy logic', given the current economic climate, and suggested that people are resorting to alternative means to deal with their debts and avoid insolvency such as payday lenders and debt management companies.

Commenting on the IS statistics as a whole, Jervis said: 'What we can't glean from these numbers is a clear message that the economy is out of the woods. The dual impacts of continuing lack of growth and austerity measures will continue to produce casualties.'