Latest statistics from the Insolvency Service have shown that business insolvencies in England & Wales decreased by 39.1% to 752 in January 2020 compared to December’s figure of 1,235, and were 50.4% lower than January 2020’s figure of 1,515.
Overall, numbers of registered company insolvencies have remained low since the start of the first UK lockdown in March 2020
The number of registered company insolvencies in January 2021 was 752, approximately half the number registered in the same month in the previous year (1,515 in January 2020). The company insolvencies, comprised of 613 CVLs, 45 compulsory liquidations, 73 administrations and 21 CVAs. There were no receivership appointments.
December 2020 was the only month since the start of the first UK lockdown in which overall registered company insolvencies were higher than in the same month of the previous year. In January 2021, when compared with the number of company insolvencies registered in January 2020.
Commenting on the latest figures Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets said “January’s fall in corporate insolvency numbers has been driven by a fall in Creditors’ Voluntary Liquidations, administrations, and Company Voluntary Arrangements.”
“These figures don’t reflect the fact that the economic fallout from the pandemic is continuing to hit businesses, individuals, and the wider economy. It’s clear the Government’s support packages – which were extended again in December – are helping prevent the rise in insolvency numbers we would have expected to see in an economic climate like this one.
“However, the support packages and bans on creditor enforcement actions can’t last forever. We hope that the Chancellor will use his Budget on March 3rd to outline how they will be wound down in an orderly manner in the medium term, and how businesses, staff, and the self-employed will be supported during this period.
“Members are telling us that companies are hesitant to make plans with conditions liable to change at any moment, so clarity around the future of the support schemes will help directors with their planning for the rest of the year. The debt burden which UK companies, especially SMEs, have built up is also a concern, as it will drag down the investment which will be a vital component of the economic recovery from the recession.
“Many firms are still struggling – and those who usually rely on a strong pre-Christmas trading period will have suffered as the third lockdown meant people couldn’t shop as they have traditionally.
“It’s possible that a number of businesses entered an insolvency procedure ahead of the December rent quarter day, which would help to explain why corporate insolvencies – and more specifically administrations and Creditors Voluntary Liquidations – increased then and fell again in January.
“The new restructuring tools introduced by the Government provide a fresh range of options for companies in distress, but to make the most of them it’s more important than ever that business leaders seek advice as early as possible.”
“Most R3 members will give an hour’s free consultation to clients to discuss their situation and the challenges they face, and to look at the potential options for turning the situation around.”