The Latest figures released from the Insolvency Service make stark reading. The figures show that the number of businesses in England and Wales that have collapsed due to insolvency rose by 18.7% in November 2021 to a total of 1,674 compared to October 2021’s total of 1,410. More alarmingly, this showed an increase of 87.9% compared to 891 in November 2020.
Company insolvencies higher
For the first time since pandemic began, the total monthly number of registered company insolvencies was higher than the levels pre-pandemic. This was driven by the higher number of creditors’ voluntary liquidations (CVLs). In November 2021 there were 1,521 CVLs, 43% higher than in November 2019. Other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic.
There 50 were compulsory liquidations, which is 32% higher than November 2020, but 82% lower than November 2019, 10 were CVAs, which is 33% lower than November 2020 and 52% lower than November 2019;
There were 93 administrations, which is 27% higher than November 2020, but 38% lower than November 2019; and there were no receivership appointments.
Between 26th June 2020 and 30th November 2021, in England & Wales, 15 moratoriums were obtained and 10 companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.
Commenting on the figures Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3 said “The monthly increase in business insolvencies has been driven by a rise in Creditor Voluntary Liquidations (CVLs) to the highest number in more than two and a half years. The increase in the use of this process suggests that a rising number of company directors are choosing to close their businesses, perhaps because they feel that survival is impossible in the current climate.”
Times are tough for Businesses in England and Wales
“Times are tough for businesses in England and Wales as the pandemic continues to take its toll on the economy and the firms that drive it. Over the last few weeks, businesses have been hit by the triple whammy of increased costs, supply chain issues and rising COVID cases.”
“They have also been operating in the face of low consumer confidence and anaemic economic growth in recent months, which, coupled with an increasingly difficult COVID situation, has led to changes in people’s shopping and spending habits and taken its toll on revenue levels.
“It remains to be seen how the introduction of Plan B will affect the economy in the short and medium term, but we know it will affect footfall, spending and operations at a time when many businesses would have been hoping for a busy Christmas period to help after a challenging year.”
“We urge any director who is worried about their business to seek advice as soon as possible. Seeking it at an early stage provides more options, more time and potentially better outcomes for businesses than if it’s delayed – and most insolvency practitioners will give an hour’s free consultation to potential new clients to learn about the situation they are in and outline their potential options for improving it.”
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