Latest figures from the Insolvency Service have indicated a 19% increase in business insolvencies in England and Wales when compared to May’s figure of 1,014, and rose 62.9% compared to June 2020’s figure of 741.
The number of registered company insolvencies in June 2021 was 1,207 this was 63% higher than the number registered in the same month in the previous year (741 in June 2020), but 18% lower than the number registered two years previously (pre-pandemic; 1,466 in June 2019).
There were 1,116 Creditors’ Voluntary Liquidations (CVLs), which was similar to pre-pandemic levels. The overall reduction in company insolvencies compared to June 2019 was driven mostly by the lower number of compulsory liquidations.
Of the 1,207 registered company insolvencies in June 2021 there were 1,116 CVLs, which is twice the amount in June 2020 and 11% higher than June 2019. 38 were compulsory liquidations, which is 46% lower than June 2020 and 86% lower than June 2019. 14 were CVAs, which is the same as June 2020 but 60% lower than June 2019; There were 39 Administrations, which is 61% lower than June 2020 and 74% lower than June 2019 and no receivership appointments.
Commenting on the figures Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3 said “The increase in corporate insolvencies between May and June – to the third-highest monthly figure since the pandemic started – has been driven by a rise in Creditors’ Voluntary Liquidations (CVLs).”
“The Government’s decision to delay lifting the final Covid restrictions for another month has clearly been a further blow to the business community and may have been particularly unhelpful for the hospitality and retail sectors, which have been hit hardest by trading restrictions and lockdowns.”
“It may be that this impact has been reflected in today’s statistics as the rise in CVLs, used by directors to voluntarily close a company, suggests that for many directors the delay to the removal of the restrictions may have simply made it uneconomic to continue trading.”
“However, we were heartened by the Business Secretary’s recent comments on HMRC’s planned approach to working with distressed businesses. In particular, the news that HMRC will take a supportive approach to rescue proposals from viable businesses is welcome, and we hope will support the profession’s efforts to support Covid-hit firms.”