What else do they show in the past three months?
A total of 3,765 overall insolvencies including liquidations and administrations were recorded over this period – which is 17% higher than in the previous quarter covering April to June and is 43% higher than the same quarter from the previous year.
Creditors voluntary liquidations (CVLs) was the most common procedure as it featured in 92% of all insolvencies with 3,471 cases.
This is a rise of 16.7% compared to the previous quarter this year and a rise of 43.5% compared to the same period a year ago.
Administrations and receiverships increased by 26% from the previous quarter and additionally company dissolutions or strike offs increased 52.1% compared to a year ago with 53,325, which was also a rise of 19.9% (25,799) on the same period in 2019 before the pandemic arrived.
Compulsory or forced liquidations remained at near all-time lows with 172 due to a combination of support measures such as the bounce back loan, CBILS and the furlough scheme as well as restrictions on creditor actions such as being able to bring winding up petitions against debtors.
Economic damage now reflected in the figures
Nick Fisher, Deputy Vice President of R3, the insolvency and restructuring trade body, said: “The economic damage caused by the pandemic is now starting to be reflected in the levels of corporate insolvency – but the picture is mixed when looking at the different types of procedure.
“Corporate insolvencies have risen this quarter to the highest quarterly figure since the pandemic began, and this has been driven by a rise in creditors voluntary liquidations (CVLs) to their highest quarterly total in 12 years.
“That said, administrations have remained static compared to Q2, while there has been a small drop in the number of CVAs; both of which are much lower compared to the year before.
“The rise in CVLs would suggest that company directors are choosing to close their businesses after trading for more than a year and a half during the pandemic and deeming future success unlikely.
“This is understandable given the current economic climate. Over the last three months, businesses have faced a perfect storm of rising energy prices, labour market and supply chain issues, coupled with the winding down and withdrawal of the Government’s support measures.
“In addition to this, consumer spending and confidence declined over the late summer and early autumn as people worried about their finances and the future of the economy, and cut back on their spending as a result.”
Chris Horner, insolvency director with BusinessRescueExpert.co.uk said: “We’ve been expecting to see company insolvencies increase for a little while so it’s no big surprise to see them increase.
“Contributing factors include the end of the furlough scheme and businesses who deferred HMRC liabilities starting to repay them as well as other borrowing such as CBILS and bounce back loans also coming due.
“A factor in the increase in creditors voluntary liquidations may be that under specific conditions winding up petitions can be pursued by creditors again so directors might have chosen to take action now rather than await others taking it.
“We’ve all seen the news about higher inflation, staff shortages, increasing energy prices, possible interest rate rises and the need to repay pandemic incurred debt. Any combination of which would likely lead to a further increase in insolvencies in the next quarter covering October, November and December this year.
“Any of these will put additional pressure on businesses over the upcoming Christmas period, especially those in the hospitality, retail and leisure sectors that have already suffered disproportionately over the past 18 months and need a positive response in the next three months.
“Any business owner or director that’s worrying about whether their company will be able to have a good enough festive sales period to meet their outgoings can use this time constructively. So can those that know they won’t be able to service their debt obligations regardless of their performance over the next three months.”
Time is short so act while you can
It will be 2022 in less than two months so time is short.
But there will be enough to help a company turn its fortunes around if those in charge use the time properly and get in touch with us to begin to work on a recovery strategy.
They can book a free initial consultation with one of our experienced advisors online, by phone or email for a convenient time and day for them.
Once we have a clearer idea of the situation facing them and their business, we can begin to put together the most appropriate, efficient and effective strategy to fix their problems and make 2022 a real year of recovery and renewal.
But only if they take the first step of the journey right now and get active in their own rescue.