The latest official corporate insolvency figures in England and Wales, have revealed a month-on-month increase of 29% between June and July, but a 34% drop on the number 12 months ago.
In response, Alexandra Withers, North East chair of insolvency trade body R3 and an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, says: “The month-on-month rise in corporate insolvencies in July is largely down to an increase in administrations, Compulsory Liquidations, and Creditors’ Voluntary Liquidations (CVLs).
“Although overall numbers remain low in comparison to the same time last year, this uptick could suggest that the pandemic might now be starting to be seen in the insolvency figures.
“It’s important to note that although today’s statistics suggest the pandemic is starting to affect corporate insolvency levels, the Government’s continued support for businesses and consumers means we’re not much nearer to understanding how COVID-19 is truly affecting underlying corporate or individual distress than we were last month.
“However, all the signs point to a tough road ahead. The UK has entered a recession, consumer confidence is low, and a number of big-name brands have recently announced they are exploring or have entered insolvency or restructuring procedures.
“This suggests the business climate will be challenging in the foreseeable future – and will not be made any easier as the Government support packages begin to wind down.
“Our members are telling us that it may not be long before companies which would be viable under normal circumstances begin to seek support from an insolvency and restructuring professional, as a result of the impact of the pandemic.
“This may also lead to an increase in requests for personal insolvency support if people lose their jobs or agree to take on liability for a business’s debts as part of an unsuccessful attempt to turn it around.
“Our advice to anyone who is worried about their personal or their business’s financial health is to seek advice from a qualified professional as soon as they start to see signs they might be in trouble.
“Doing so will give them the best chance of turning their situation around – and more options and more time to take a decision on how they move forward.”