What direction was the economy heading in last month?
The main headlines are that May continues the trend begun last month that shows a decrease in company insolvencies.
There were 944 company insolvencies in England and Wales – down from 1,196 in April. This was comprised of 790 Creditor Voluntary Liquidations (CVLs), 32 compulsory liquidations, 110 administrations and 12 Company Voluntary Arrangements (CVAs).
This is a 30% reduction in total company insolvencies in the last month and an 88% reduction in May 2019.
Compulsory liquidations have also fallen from 97 last month. This is expected as they require a winding-up petition to be obtained from the court, which is already having reduced access and sittings during the lockdown period.
Another contributing factor is that statutory demands leading to the issuing of a winding-up petition have been prohibited until June 30th at the earliest.
Companies House is also running under reduced capacity which means there’s a delay in essential documents being issued to insolvency practitioners.
The biggest factor by far however, is the wide-ranging support measures being offered by the government under their COVID-19 support effort.
Businesses have had the ability to apply for loans and grants and avoid paying VAT and businesses rates for the time being. Staff have also been allowed to be furloughed rather than made redundant which will give companies valuable flexibility when they’re ultimately allowed to reopen.
The extraordinary circumstances facing businesses at the moment won’t last forever.
Eventually companies will have to make a decision on how to reopen or whether you can even do so in existing premises with new rules on social distancing.
Whatever you decide to do with your business you should get in touch with us to see what else we can do to help you.
Whether it’s helping you reorganize your finances and restructure the business to be more resilient and robust or looking at how you can deal with excessive debts and creditors, we’re available when you need us.