Insolvency figures that the Department of Trade and Industry released last month understate the number of company failures in England and Wales, according to insolvency practitioners.

DTI figures show that insolvencies increased by 8.1% in the first quarter. But R3, the association for insolvency practitioners and turnaround specialists, says the number of receiverships rose by 82%.

R3 president Roger Oldfield, an insolvency partner at KPMG, says that 'there is a mounting wall of companies in difficulty and you can't support all of them - the ones that are beyond redemption will become insolvent sooner or later'.

He says that banks are trying to avoid putting companies into insolvency. Instead, companies are entering administrative receiverships, or working on informal turnaround plans. However, many companies will slip through the net because of rapidly-changing market conditions and bad management.

The engineering, automotive, telecoms and retail sectors are experiencing low growth and financial difficulty. Oldfield predicts that companies in these sectors will be the victims of a huge wave of insolvencies.

PricewaterhouseCoopers said the increase in fourth quarter insolvencies was fuelled by hi-tech and telecom company failures, and the US slowdown had made the situation worse. It said failures had gathered pace because of waning overseas investor confidence and over-supply.

KPMG restructuring partner Ann Davies said the 'hi-tech and electronics sectors have never really had to deal with these sorts of pressures before, and are now learning the hard way'.