The Insolvency Service has published its latest business insolvency statistics for England & Wales which have revealed that the overall numbers of business insolvencies numbers increased
Business insolvencies increased to 926 in September 2020 compared to August’s figure of 784, but remained well below September 2019’s figure of 1,513.
Business insolvencies comprised of 742 creditors’ voluntary liquidations (CVLs), 44 compulsory liquidations, 109 administrations and 31 company voluntary arrangements (CVAs). There were no receivership appointments.
The overall number of company insolvencies decreased by 39% in September 2020, when compared to the same month last year.
This was primarily driven by a decrease in the numbers of CVLs and compulsory liquidations which fell by 32% and 81% respectively. The number of companies entering administration in September 2020 also fell when compared to the same month last year by 31%.
The number of CVAs increased in September 2020 by 41% when compared to the same month last year. It is worth noting however that the number of CVAs in September 2019 was lower than typically seen in other months during the year. Additionally, since the monthly numbers of CVAs are low, even a small change in numbers can result in large percentage changes when making comparisons from one month to another.
Overall numbers of company and individual insolvencies remained low in September 2020, when compared with the same month in the previous year. This was likely to be at least partly driven by government measures put in place in response to the coronavirus (COVID 19) pandemic
Commenting on the figures, Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets, said “Today’s month-on-month increase in corporate insolvencies was driven by an increase in the number of Creditors’ Voluntary Liquidations. Although starting from a low base, there was a notable increase in the number of Company Voluntary Arrangements (CVAs).”
“These results show that the toll the COVID-19 pandemic is taking on businesses and consumers may be starting to be felt in the official insolvency numbers, but the Government’s support measures have reduced the size and scale of the initial impact.”
“Despite the increases, today’s figures are still lower than pre-lockdown levels of insolvency and don’t fully reflect the health of businesses and the economy in the way they would normally. As a number of the Government’s temporary insolvency measures have recently been extended – some until the end of March next year – and plans to continue supporting COVID-hit businesses and individuals have been announced, it’s likely this trend of unrepresentative insolvency statistics will continue for some time.”
“The situation for businesses and consumers remains worrying. The economy is still 9% below pre-pandemic levels, despite growth of 2.1% in August, which shows it has failed to fully recover from the significant contraction in April. We’ve also seen more big brands enter formal insolvency processes, or consider restructuring options, as the delay in returning to pre-pandemic conditions inevitably hampers trading.”
“It’s likely that directors of businesses that would have remained profitable had COVID not happened will see signs their businesses are struggling for the first time ever. We would urge them to seek advice as soon as these signs appear. The earlier you seek advice – whether that’s about your personal or business finances – the greater number of options you have to turn the situation around.”