• Fri. Jul 19th, 2024

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R3 North East chair Chris FergusonR3 North East chair Chris Ferguson

North East business owners’ Christmas wish for a festive trading boost appear to have been left unfulfilled after the latest official insolvency figures showed a continuing rise in the number of corporate insolvencies across England and Wales.

That’s the view of Chris Ferguson, North East chair of insolvency and restructuring trade body R3, who was speaking after the latest Insolvency Service statistics revealed a six per cent month-on-month increase from the 1,682 cases of corporate insolvency registered across the two countries in January up to the 1,783 cases lodged last month.

The February figure is also a substantial 160.3% higher than the number for the same month last year (685), when the government’s pandemic insolvency protections were still in place, and is 32.6% higher than the pre-pandemic number for February 2020 (1,345).

The Insolvency Service statistics show that the number of firms being put into liquidation through Creditors’ Voluntary Liquidations (CVLs), a procedure initiated by directors of insolvent firms to close their companies, remain at their highest level in more than six decades.

Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “Trading conditions clearly remain tough for many businesses, and it seems like the traditionally busy Christmas and New Year trading period, which is particularly important for operators in the retail, hospitality and leisure sectors, didn’t give the boost those sectors were hoping for.

“Corporate insolvency numbers are at their highest level in four years due a rise in Creditors’ Voluntary Liquidations. Numbers for this particular process are higher than in each of the previous four years as more and more directors are choosing to close their businesses.

“After nearly three years of lockdowns, supply chain issues, rising costs and falling revenues, it seems that many business owners have simply had enough, and are closing their companies before the decision is potentially taken out of their hands.”

Personal insolvencies across England and Wales also showed a month-on-month increase, rising by 5.9% to 8,210 in February compared to 7,750 in January, although they were 16.5% lower than February 2022 figure of 9,838.

Chris Ferguson continues: ““People are still very worried about money and the economy, and may be reluctant to spend on anything other than the basics, while at the same time, the costs of energy, fuel and wages continue to be a major concern for businesses.

“Now is the time for North East company directors to be extra vigilant for any signs of business distress and ensure they seek advice promptly when needed.

“Cashflow issues, payment delays and increasing stock levels are all signs that specialist support may be needed and the earlier directors seek advice, the greater the options available for turnaround measures to be put in place.”