Insolvencies will inevitably return to pre-pandemic levels, says the UK’s largest accountancy firm for SMEs.
Kerry Pearson, Restructuring and Insolvency Partner at Azets in the North East, comments on the April 2021 corporate and personal insolvency statistics for England and Wales.
Corporate insolvencies
“The number of insolvencies in April (925) was 7% below March (992) and 23% below April 2020 (1,199) and 35% below April 2019 (1,429). We expect this trend of low corporate insolvency numbers to continue into May and June while government support schemes remain available. However, the tide is likely to turn soon.
“While it remains uncertain exactly when the number of insolvencies will increase, it is inevitable that they will return to at least pre-pandemic levels in the future.
“Now that the lockdowns are easing and a number of businesses in the region that have been closed for most of the last 12 months are allowed to reopen, we expect that more businesses will need to carefully consider what future funding they will require if sales do not quickly return to pre-pandemic levels. Insolvency levels will rise when that funding is no longer readily available through the government schemes and creditors are once again able to enforce their rights.”
Personal insolvencies
“The number of debtors petitions (the number of individuals seeking the relief of Bankruptcy) has fallen by 25% from last month but Creditors Petitions and Debt Relief Orders remain roughly the same.
“This may be because the increases last month have dealt with all the previous debt build up or potentially because debtors are preferring to see how the economy recovers as the country comes out of lockdown. With the proposed increases in the limits of those qualifying to enter Debt Relief Orders, it is likely that the number of Debtors Petitions will continue to fall, although this will be dependent on the speed of the recovery of the economy and particularly the job market.”