Blog written by Chris Parkman, Managing Director at Science Park tenant Purnells.
The latest figures from the Insolvency Service show that the number of company insolvencies in England and Wales rose by 18.7% in November 2021 to a total of 1,674 compared to October 2021’s total of 1,410, and increased by 87.9% compared to November 2020’s figure of 891.
The monthly number of registered company insolvencies is now higher than the pre-pandemic levels. This was largely due to 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, are still lower than before the pandemic.
There were 50 Compulsory Liquidations, which is 32% higher than November 2020, but 82% lower than November 2019, 10 were Company Voluntary Arrangements, 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.
Many will say that these figures are not surprising, now that much of the Government’s support for companies has been withdrawn, and the payments for Bounce Back Loans have now started to fall due.
With rising costs across the board, margins are going to be pushed even more, and I suspect that these figures are likely to increase over the next six to twelve months.
Also, I think that it is worth bearing in mind that there are still some restrictions on creditors taking action against companies which owe them money. From the figures, it can be seen that Compulsory Liquidations are still down on historic figures. The increase in insolvency cases is due to the increase in Creditors Voluntary Liquidations, which means that these rises have come about as a result of directors taking action themselves. There will be many directors however who are still trying to continue on, or have buried their head in the sand.
When the restrictions on issuing winding up petitions are lifted in March 2022, I think that the number of Compulsory Liquidations will also increase substantially and then the overall insolvency figures will increase dramatically again.
With rising levels of Covid-19 due to the Omicron variant however, whether or not further Government support will be made available and whether or not new restrictions will be introduced, remains to be seen.
Needless to say these are worrying times for directors, business owners and the British economy. It will therefore be important for directors and business owners to take professional advice regarding their situation and take appropriate action.
If you would like to discuss any issues raised in this blog, please do not hesitate to contact Purnells on 01326 340579 or email firstname.lastname@example.org