Corporate insolvencies increase as Government support measures come to an end
A month-on-month rise in the number of corporate insolvencies in England and Wales suggests that the effect of the pandemic is starting to be seen in the statistics published by The Insolvency Service. Latest figures indicate that in July business insolvency numbers increased by 29% when compared to June 2020 but are 34% lower than in July 2019.
There were 955 company insolvencies in July 2020 comprising of 590 creditors’ voluntary liquidations (CVLs), 166 compulsory liquidations, 182 administrations and 17 company voluntary arrangements (CVAs).
R3 Midlands Chair Eddie Williams, a partner at Grant Thornton in the East Midlands, said:
“The monthly rise in corporate insolvencies in July is largely down to an increase in administrations, compulsory liquidations and creditors’ voluntary liquidations. Although overall numbers remain low in comparison to the same time last year, this uptick suggests that the pandemic is starting to be seen in the insolvency figures.
Currently, it is difficult to see exactly how COVID-19 is affecting underlying corporate distress due to the Government’s continued, and much-needed, support for businesses. What is clear, however, is that all the signs point to an exceptionally challenging road ahead.
This is not helped by the fact that the UK economy has now officially entered recession, consumer confidence is low and a number of big-name brands have recently announced they are exploring, or have entered, insolvency or restructuring procedures.”
Mark Harris, Managing Director, The Business Company said:
“It is all too easy to see these corporate insolvencies as collateral damage and yet another sad statistic of this pandemic crisis. In reality, every business that finds itself in financial difficulty is made up of individuals (owners/employees) whose livelihoods are reliant on its success, not to mention the impact on suppliers/customers etc.
Reaching out to suitably qualified professionals who can quickly and objectively assess the situation and provide turnaround options is time-critical. Business owners who act swiftly and prior to engaging insolvency companies can provide businesses with the best chance of recovery."
In June 2020, the Corporate Insolvency and Governance Act received Royal Assent. The Act is the largest change to the UK’s corporate insolvency regime in more than 20 years. It introduces new corporate restructuring tools and temporary easements to give distressed businesses the breathing space they need to get advice and seek a rescue.
Many UK business and beyond are already engaging experienced objective advisers to support them during this process to ensure a level of objectivity and structure. The Business Company, has over a decade of experience in this field, and we are keen to support our economy across The Marches/ West Midlands. We are offering a free ½ day initial analysis to support businesses from all sectors who would welcome support.