What do the latest statistics mean?
It’s as good a time as any for those lucky people left behind to look back on April, May and June, collectively known as Quarter 2, and what’s happened to companies in the UK during this time.
Before we get down to the exciting insolvency news – let’s look at the overall picture.
Firstly we welcomed 169,976 new companies into the world but said goodbye to 135,870 so a net gain of 34,106.
The total number of companies in the UK is currently 4,237,994 which is a rise of 1% from the end of March (Q1) and up 4% from the same period last year (Q2 2018).
Company dissolutions for the year from Q2 2018 to Q2 2019 were up 7.4% or 9,316 and have continued to nearly double in size since Q1 2012 and now – More than 64,602 additional companies disappeared during that time.
The big story as far as the insolvency industry is concerned is that the number of insolvent companies in England and Wales is at its highest figure in more than five years.
What happened in April, May and June this year?
The Insolvency Service reports that 4,321 companies entered insolvency during Q2 (April to June) on an underlying basis – that is excluding bulk closures of personal service companies.
This is a rise of 2.5% from 4,213 in Q1 and is up 9.3% on the corresponding quarter last year. It’s the largest quarterly total since Q1 2014.
In the 12 months ending in Q2 2019, 1 in 237 companies entered liquidation. This was up from 1 in 238 from Q1.
The rise was mainly driven by new Creditors Voluntary Liquidations (CVLs) which increased 6.9% to 3,040 in Q2. All other types of company insolvency fell – compulsory liquidation by 4.1%; CVAs by 1.1% and administrations fell 11.4% from 452, a 5 year high in Q1 2019 to 400.
In Q2, 70.4% of all company insolvencies were CVLs, 18.2% were compulsory liquidations and 11.4% were other types of company insolvency.
There were 92 CVAs in Q2 down from 93 in Q1 and 94 in Q2 of the previous year despite the practice getting a lot of media coverage recently as an unconventional method for retailers to secure lower rent from landlords.
Underlying insolvencies increased in the 12 months ending Q2 2019 were driven by the accommodation and food service industries.
In the 12 months ending Q2 2019, there were 97 extra underlying company insolvencies compared to Q1 2019, a 0.6% increase.
The highest number of new company insolvencies was in the Construction industry with over 3,000 insolvencies.
“A difficult period for UK businesses”
Duncan Swift, President of R3, the insolvency industry trade body, said: “Today’s figures are evidence of a difficult period for UK businesses.
“Businesses which stockpiled items ahead of the original Brexit deadline of 29 March will now be seeing those decisions have an impact on their cash flow levels.”
Don’t let your business become another statistic. Contact one of our expert team of advisors today to arrange a free initial consultation with us.
We will run through every aspect of your company and what can realistically be done to change its fortunes.
If it can be saved we’ll talk about how and what you can do and if it can’t we’ll discuss what the most efficient and clear options are to close with a minimum of fuss and stress.