Latest figures from the Insolvency Service has shown that the number of businesses in England and Wales that business insolvencies fell by 3% in October to a total of 1,405 compared to September’s total of 1,449, and increased by 63.6% compared to October 2020’s figure of 864.
The increase in company insolvencies compared to October 2020, was driven by an increase in the number of CVLs, which were 19% higher than pre-pandemic levels.
The 1,405 registered business insolvencies comprised of1,248 CVLs, which is 85% higher than in October 2020 and 19% higher than in October 2019;
There were 46 were compulsory liquidations, which is 31% lower than October 2020 and 81% lower than October 2019;16 were CVAs, which is 24% lower than October 2020 and 56% lower than October 2019;
There were 95 administrations, which is 8% lower than October 2020 and 40% lower than October 2019; and no receivership appointments.
Christina Fitzgerald, Deputy Vice President of insolvency and restructuring said “The month-on-month fall in corporate insolvencies has been driven by a reduction in the number of Creditors’ Voluntary Liquidations. However, there are still twice as many companies entering this procedure than this time last year, and nearly 20% more than in 2019.”
“This would suggest that there are still a fair number of company directors who are choosing to close their businesses after deeming post-pandemic success unlikely. However, the fact that overall corporate insolvencies are 5% lower than the number in October 2019 suggests that the Government’s support measures have prevented the economic consequences of COVID from translating into higher levels of corporate insolvency.”
“The business climate is still harsh. Economic growth is slowing, costs are rising, and consumer confidence is falling. And although consumer spending is higher than it was this time last year, rising COVID case numbers and sharp energy price rises have meant many businesses aren’t seeing the benefits of this.”
“As we move closer to Christmas, we would urge company directors to be mindful of the signs of business distress, which include cashflow problems, issues paying invoices, and concerns about paying staff, and seek advice as soon as they appear.”
Nicola Banham, Restructuring Director, at Azets, the UK’s largest regional accountancy firm and business advisor to SMEs, comment on the October 2021 company and individual insolvency statistics for England and Wales said “Corporate insolvencies in October 2021 (1,405) were just 5% lower than pre-pandemic levels in October 2019 (1,480). Whilst corporate insolvencies were relatively static this month, we expect corporate insolvencies to increase as companies continue to experience cashflow pressure due to the surging cost of staffing, energy prices, and raw materials, due to ongoing supply chain challenges.
“There was a small increase in the number of compulsory liquidations in October, following the end of the restrictions on winding-up petitions which were lifted on 1 October. It is once again possible to present a winding-up petition where a company has failed to satisfy a statutory demand, and it is no longer necessary to consider the financial effect of Covid-19 on the company. There is a 21 day consultation period prior to submitting a petition so we expect to see an increase in compulsory liquidations next month.
“The number of administrations continues to creep up, which could offer insight into the health of UK mid corporates. Administration has hopefully been selected as an alternative to liquidation as it has been possible to rescue the business.”