Business insolvencies fall by 9.3% in July

Latest monthly figures from the Insolvency Service have indicated that business insolvency numbers across England & Wales fell by 9.3% to 1,094 in July 2021 compared to June’s figure of 1,206, and increased by 13.4% compared to July 2020’s figure of 741.

Of the 1,094 registered company insolvencies in July 2021 there were 1,007 CVLs, which is 70% higher than in July 2020 but the same as in July 2019, 41 were compulsory liquidations, which is 77% lower than July 2020 and 84% lower than July 2019, Six were CVAs, which is 65% lower than July 2020 and 85% lower than July 2019.

There were also 40 Administrations, which is 78% lower than July 2020 and 73% lower than July 2019.

Between 26th June 2020 and 31st July 2021, 13 companies obtained a moratorium and nine companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.

Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets said “The month on-month fall in corporate insolvencies was as a result of a drop in Compulsory Liquidations, Creditors’ Voluntary Liquidations, Administrations and Company Voluntary Arrangements.”

“However, this is the third consecutive month in which year-on-year corporate insolvency levels have risen, which reflects the effect the pandemic has had on the business community.”

“The 70.4% increase in Creditors’ Voluntary Liquidations this month compared to July 2020 suggests an increasing number of directors have decided to close their businesses after spending a year trying to survive the pandemic.”

“Although Government support has continued to provide a lifeline for many businesses which would have otherwise struggled in an economic climate like this, this July was still a challenging month.”

“The delay in lifting the final restrictions will have hit trading, footfall and spending, and a huge number of firms have spent 15 months trading in conditions that are wildly different to normal.”

“With the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than they were in 2019, the future does look more optimistic. Having said that, it will take longer for the worse-hit sectors to recover from the pandemic.”

“SMEs are the backbone of the UK economy, but many have been badly affected by the pandemic. The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.”