Company insolvencies return to pre-pandemic levels in August

Last month saw the highest number since lockdown began & the highest level of CVLs since Jan 2019.


Company insolvencies finally return to pre-pandemic totals in August

September 2021

 

 

 

After an unexpected decline in the number of company insolvencies in the UK in July, the August total rose to levels not seen since before the pandemic according to the latest official monthly company insolvency statistics released by The Insolvency Service

 

For England and Wales alone, the total number of corporate insolvencies for August 2021 was 1,348 – this was up 251 from the 1,097 recorded in July and is 71% higher than the 788 insolvencies recorded in August a year ago. 

 

The total is also broadly similar to the pre-pandemic total of 1,366 from August 2019 and represents the fourth consecutive month both of insolvencies numbering over 1000 and being higher than the same month a year previously.   

 

Of these 1,348 company insolvencies, the vast majority were Creditors Voluntary Liquidations (CVLs) making up 1,256 of the total amount. 

 

Additionally, there were 35 compulsory liquidations; 55 administrations; 2 company voluntary arrangements (CVAs) and zero receivership appointments. 

 

Breaking these down further we see:

  • CVLs were more than double their number from August 2020 – 585 and were 30% higher than the number of CVLs in August 2019. 
  • Compulsory liquidations are 55% lower than a year ago and 82% lower than August 2019.
  • CVAs are 87% lower than August 2020 and 93% lower than two years ago. 
  • Administrations were 50% lower than 12 months ago and 69% lower than they were in August 2019. 

 

There were 89 company insolvencies in Scotland last month, up from 72 in July. This was also nearly double the number from a year ago and was 13% higher than in August 2019. 

 

This comprised 11 compulsory liquidations, 76 creditor voluntary liquidations and two administrations. There were no CVAs or receivership appointments recorded. 

 

From a historical perspective, compulsory liquidations have been the most common type of insolvency recorded in Scotland but since April 2020 there have been more than twice as many CVLs as compulsory liquidations. This has now been the situation for 15 out of the previous 16 months. 

 

In Northern Ireland there were 9 company insolvencies registered which although five less than in July it was more than double the number from a year ago although 59% lower than August 2019. 

 

This was made up of eight CVLs and one compulsory liquidation. 

 

The overall total of UK company insolvencies for August 2021 is 1,446, which is up 266 from last month.

 


 

Colin Haig, President of R3, the insolvency and restructuring trade body said: “The insolvency figures published today highlight how much tougher the climate is for businesses and individuals than this time last year, and the toll the pandemic has taken on business and personal finances over the last 12 months.

 

“The increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations (CVLs). 

 

“Numbers for this process were 115% higher than this time last year, and 30% higher than in 2019, which suggests that despite the opening up of the economy, there are a number of company directors who are opting to close their businesses after a year and a half of trading in a pandemic. 

 

“This comes despite the fact that August was one of the better months for businesses since the start of the pandemic. The lifting of the final restrictions and continued impact of the vaccine rollout means that more people are working, shopping and spending and that looks set to continue as we enter the autumn.

 

“However, with the furlough scheme closing at the end of this month, company directors need to be aware of the signs of business distress and seek advice if any of them appear. 

 

“If a firm is having problems paying rent, staff or suppliers, has issues with cash flow, or its directors are concerned about its future, now is the time to seek advice from a qualified professional, rather than waiting until the problem has become worse.”

 


 

The numbers couldn’t be any clearer. 

 

For the fourth month in a row, company insolvencies are higher than they were a year ago and now are nearly back to where they were before the pandemic began. 

 

This is before the furlough scheme finally winds up at the end of September and winding up petitions can begin for businesses that owe creditors over £10,000 – under this amount continues to be suspended until the end of March 2022. 

 

As HMRC begins to increase their clawback of outstanding debts including overdue bounce back loans and VAT arrears, the next few months look increasingly tough for businesses already struggling with their finances. 

 

If there’s a time to look for help and get expert advice on what options are available then it’s now. 

 

Any business owner or director taking advantage of our free initial consultation might be surprised at how much room to maneuver they actually have, but until they get in touch and let us know their situation – they won’t know for sure.

 

What we know for sure is that the longer businesses leave it, the less opportunity they will have to act when they really need to.  

Contact Us

    More News