It’s in the spirit of anti climax we look at the newly released official monthly company insolvency statistics by the Insolvency Service - because after increasing for two consecutive months they have fallen back again.
The number for England and Wales inclusively last month was 1,405, which although similar to pre-pandemic levels was 3% (41) lower than the previous month’s total.
It was still 63% higher than the same month in the previous year but was 5% lower than the pre-pandemic total of October 2019.
Despite the slight monthly fall in numbers, October 2021 was the sixth month in succession when the number of corporate insolvencies were over 1,000 and were also higher than the corresponding figure for the year before.
Of the total 1,405 company insolvencies, the vast majority are still Creditor Voluntary Liquidations (CVLs) which made up 1,248 of the total amount.
This is higher than pre-pandemic levels but other types of company insolvencies such as compulsory liquidations including winding up orders remain lower.
If we break the figures down further we can see:
There were a total of 68 corporate insolvencies in Scotland in October, down from 70 recorded in September.
This consisted of 12 compulsory liquidations (8 in September), 54 CVLs (52 in September) and two administrations (down from 10 last month). There were no CVAs or receivership appointments this month.
The total of 68 was 58% higher than in October 2020 but 18% lower than October 2019.
In Northern Ireland in October there were 14 company insolvencies registered which is three more than the previous month and 75% higher than a year ago but remains 73% lower than pre-pandemic October 2019.
This was made up of 12 CVLs, one administration and one compulsory liquidation. There were no CVAs or receivership appointments registered.
The overall number of UK company insolvencies for October 2021 is 1,487 which is down by 40 from September but remains higher than the 1,446 recorded in August.
Christina Fitzgerald, Deputy Vice President of R3, the insolvency and restructuring trade body, said: “The month on month fall in corporate insolvencies has been driven by a reduction in the number of Creditors’ Voluntary Liquidations (CVLs).
However, there are still twice as many companies entering this procedure than this time last year, and nearly 20% more than in 2019.
“This would suggest that there are still a fair number of company directors who are choosing to close their business after deeming post-pandemic success unlikely. However, the fact that overall corporate insolvencies are 5% lower than the number in October 2019 suggests that the Government’s support measures have prevented the economic consequences of COVID from translating into higher levels of corporate insolvency.
“The business climate is still harsh. Economic growth is slowing, costs are rising, and consumer confidence is falling.
“And although consumer spending is higher than it was this time last year, rising COVID case numbers and sharp energy price rises have meant many businesses aren’t seeing the benefits of this.
“As we move closer to Christmas, we would urge company directors to be mindful of the signs of business distress, which include cash flow problems, issues paying invoices, and concerns about paying staff, and seek advice as soon as they appear.”
For the sixth month in a row, company insolvencies are higher than they were in the corresponding month six months ago and are approaching parity with the same levels they were about before the pandemic and subsequent lockdowns began.
Against this backdrop, businesses are having to contend with an uncertain pre-Christmas trading period with the threat of Covid-19, staffing shortages, supply chain problems and growing debt obligations.
Businesses with outstanding bounce back loan payments, VAT and PAYE arrears and other unmanageable commitments might be wondering how they will manage to make it through the New Year and into early 2022, let alone return to profitability.
There might be a solution within their reach if they get in touch with us first.
We offer a free initial consultation to any business owner or director who wants to discuss their situation in more detail with one of our experienced advisors.
Once they have a firmer grasp of the situation, they will be able to recommend various courses of action they can take to help turn their situation around.
Alternatively, if the debts are too problematic to deal with then they can also explain the various options they can use to close their business with a minimum of fuss and stress and ensure that creditors receive their due.