The first month-on-month rise in the number of corporate insolvencies for almost a year should spur North East business owners with concerns about their own firms’ financial situations to seek advice now.
That’s the view of Alexandra Withers, North East chair of insolvency and restructuring trade body R3, after the publication by the Insolvency Service of December’s official corporate insolvency statistics for England and Wales.
The number of corporate insolvencies increased by 37.8% from 891 in November to 1,228 last month, and was 9.2% higher than for December 2019’s figure of 1,125.
And with corporate insolvency numbers expected to keep rising this year, Alexandra Withers, who is an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, is advising business owners who are becoming concerned about their company finances to seek qualified advice as early as they can.
She says: “This is the first time since February 2020 that the monthly corporate insolvency figures are higher than in the same month the previous year, which suggests that that the economic impact of the pandemic may now finally be pushing increasing numbers of struggling businesses over the line into formal insolvency.
“While it’s too early to judge the impact of the latest lockdown on North East businesses, it has further complicated an already muddy economic picture, and will likely have been an additional blow for regional firms which lost the busy festive period on which they traditionally depend.
“It’s plainly a question of when, not if, insolvency numbers will further increase this year, especially as the Government’s support packages, which have provided a critical safety net for businesses and individuals, are due to start running out at the end of the first quarter.
“Even if the Chancellor decides to extend them again, as he’s had to do previously, they will have to come to an end at some point.
“Covid-19 has had a devastating impact on the UK’s economy, which fell by 8.9% in the twelve months to November 2020, and we’ve already seen a number of big brands, including many household names, either enter insolvency processes or announce restructuring programmes as their operations were hampered.
“As soon as signs of financial trouble surface in your business’s finances, it’s time to seek advice from a qualified and reputable source.
“Doing so will allow more options to resolve your situation, and more time to take a considered decision about potential solutions.”