Slight return to normal? November Corporate Insolvency Statistics released

While everyone’s beginning to turn their attention to the hopefully busy but safe Christmas period, The Insolvency Service has reminded us what happened last month with the publication of its latest set of company insolvency statistics for November. 


Slight Return – November Corporate Insolvency Statistics released

Nov stats

 

In November there were a total of 889 company insolvencies in England and Wales with an additional 46 in Scotland and 7 in Northern Ireland which is a UK total of 942 – a small rise on the 856 total for October.

 

The small uptick is likely due to insolvencies already arranged for the end of furlough, before it was extended at the 11th hour.

 

The 889 case total is made up of 767 Creditors Voluntary Liquidations (CVLs); 34 compulsory liquidations; 73 administrations and 15 Company Voluntary Arrangements (CVAs). 

 

It is still 41% down on the same month in 2019 but with good and demonstrable reasons for it. CVLs have fallen by 28% year on year and compulsory liquidations are down a massive 88%. 

 

CVAs are down 29% and administrations have fallen by more than half to 51%. 

 

We’ve written about this before, detailing how all types of company insolvencies have fallen in consecutive quarters this year and this trend continues into Q4 although the figures did uptick slightly on last month.  

 

Company Voluntary Liquidations (CVLs) are far and away the most common insolvency process accounting for nearly three quarters of all procedures. 

 

The continuing relatively small number of both CVAs and administrations considering we are in a historic economic situation might still surprise at first glance but a straightforward explanation exists.  

 

Firstly, financial support available to companies during the pandemic has been extended into March and April 2021 which is a welcome development, it also means that some businesses still function that would otherwise either be in insolvency or closed. 

 

Additionally, the continuing suspension of statutory demands and winding-up petitions until makes it virtually impossible for creditors to take any enforcement action, along with the fact that the courts are running on a skeleton system.

 

They won’t be able to offer a full and functioning service until Spring at the earliest as they’re having to deal with both an increasing backlog and what will be a flood of new demands once the temporary suspension on enforcement measures is lifted. 

 

“Many companies will face a cold start to 2021”

 

Colin Haig, President of R3 – the insolvency and restructuring trade association, said: “The increase in corporate insolvency numbers in November has been driven primarily by a rise in CVLs although CVAs, administrations and compulsory liquidations all fell compared to the previous month. 

 

“Despite the small monthly increase in overall corporate insolvencies, the statistics are not an accurate reflection of the state of the economy or the state of the UK business community. 

 

“WIthout the extensive support the Government has provided we’d be in a very different situation – and a very grave one at that. The economy is still nearly 8% smaller than it was in February, unemployment has increased and a number of big brands have entered insolvency processes or announced restructuring programmes in recent weeks. 

 

“A good festive trading period has never been more important, but the impact of repeated stop-start closures in many sectors, and the disruption to usual pre-Christmas activities and events mean that many companies will face a cold start to 2021.”

 

Anybody who has tried to start a car after it’s been left standing for an extended period understands the risks. 

 

If you’re lucky it can restart with a minimum of cajoling and assistance but others will need specialist help to get them turning over and working well again. 

 

In the worst case scenarios, you might have left it too late to get help and the only thing you can do is look at expensive new parts. 

 

It’s the same with a business that is struggling going into this crucial winter trading period. If you’re lucky enough to be in a sector that lets you trade that is. 

 

With so much economic uncertainty still ahead of us, businesses that act now to make sure they are doing everything they can to support and protect their livelihoods will have a significant advantage over those who don’t or leave it until things really are too late for them. 

 

You can get in touch with us right now to arrange your free initial consultation.

 

It can be done virtually at a convenient time and date for you and we can talk through what’s worrying you and how you can start to prepare for a better future for your business in 2021.

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