Whilst the employment numbers released last week looked positive, monthly insolvency figures issued on 16 July 2021 show a significant increase in company failures, reflected especially in the number of Creditors Voluntary Liquidations (CVLs) registered in June.
Total company insolvency cases were reported to be 1,207, 18% lower than the equivalent period in 2019, (pre-pandemic), but is 63% higher than June 2020 when there were 741 cases.
Of cause for concern is that 1,116 of these cases were CVLs, double the number of June 2020 and an increase of almost pre-pandemic levels. Is this an indication of the severe pressures companies are facing as Covid19 support measures are cut or even cease? It may be too early to be certain but many will be looking very closely at trends in the next months.
By way of contrast, there were just 38 compulsory liquidations, 46% lower than June 2020 and 86% lower than 2019. This is likely to be partly driven by government measures put in place to financially support companies in response to the coronavirus pandemic, including temporary restrictions on the use of statutory demands and certain winding-up petitions. But restrictions on action don’t mean that problems have gone away so again we will have to see what happens.
There is no doubt that some business sectors have boomed in recent months and there will be chances to take advantage of new opportunities and generate profits as the economy expands, if directors take steps to ensure they are in a position to do so. That is a good reason to take stock of your current business to assess whether it continues to be viable. It is noteworthy that the number of “traditional recovery processes”, such as Administration, (pre-pack or otherwise) and Company Voluntary Arrangements remain low, maybe again a lack of confidence on the part of directors and business owners or lenders.
If these issues are affecting you, or you can feel financial pressures building, the time to seek advice is now. T H Financial Recovery offers free, professional and confidential advice and we are only a phone call away. Please call 01282 332222 or email info@thfr.co.uk for a confidential chat and practical solutions.
Source: Insolvency Service