The number of businesses in England and Wales that went bust last month was the largest since the pandemic began. The latest Insolvency Service data shows that 1,446 company insolvencies were registered last month.
Business insolvencies have increased by 7.2% in September 2021 compared to August’s figure of 1,349. They also increased by 55.8% in comparison to the same period for last year. However on a positive note, they were down 4% compared to September 2019.
The increase in company insolvencies was driven by an increase in the number of Company Voluntary Liquidations (CVL’s). They recorded as being 21% higher than pre-pandemic levels.
Of the 1,446 registered company insolvencies in September 2021 there were 1,328 CVLs, which is 80% higher than in September 2020 and 21% higher than in September 2019. 25 were compulsory liquidations, which is 49% lower than September 2020 and 89% lower than September 2019. This is the lowest level in the time series;
12 business insolvencies were CVAs, which is 61% lower than September 2020 and 45% lower than September 2019. There were 81 administrations, which is 26% lower than September 2020 and 49% lower than September 2019 and here were no receivership appointments.
Between 26th June 2020 and 30th September 2021, 14 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.
Nicky Fisher, Deputy Vice President of insolvency and restructuring trade body R3, said “The insolvency statistics published today show the economic effects of the pandemic are continuing to take a toll on businesses and consumers.”
“The dramatic increase in corporate insolvencies compared to this time last year – to the highest level since January 2020 – illustrates just how crucial the Government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for the business community now it has ended.”
“The monthly increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations, which increased for the third consecutive month. This suggests that directors are choosing to close their businesses after deeming their financial survival unlikely after 18 months of trading through a pandemic.”
“Despite the fact that businesses have benefitted from two months of restriction-free trading and the economic boost over the summer, conditions are still not back to where they were before the pandemic.
“Anyone worried about their finances – business or personal – should seek advice at the earliest possible opportunity. When you’re worried about money, having that initial conversation about your concerns is hard, but doing so as early as possible will mean you have more potential solutions available and more time to take a qualified decision about which of them is right for you.”
Business that are owed money are being urged to take debt recovery specialists action before it becomes too late.