• Mon. Apr 22nd, 2024

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Third Consecutive Year-On-Year Corporate Insolvencies Increase Reveals A ‘Challenging Month’ For North East Businesses

The year-on-year level of corporate insolvency has risen for a third consecutive month, highlighting the continuing impact of the pandemic on North East businesses.

The latest corporate insolvency figures for England and Wales reveal a 70.4% increase in Creditors’ Voluntary Liquidations in July compared to July 2020, suggesting an increasing number of directors have decided to close their businesses as a result of the challenging conditions created by the pandemic.

While corporate insolvencies fell by 9.3% month-on-month in July 2021, to 1,094 compared to June’s figure of 1,206, they increased year on year by 13.4% compared to July 2020’s figure of 965.

Alexandra Withers, North East chair of insolvency and restructuring trade body R3 and an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, describes July as a “challenging month” and is urging anyone worried about their business finances to seek advice as early as possible.

She says: “The 70.4% increase in Creditors’ Voluntary Liquidations last month compared to July last year suggests an increasing number of directors have decided to close their businesses after spending a year trying to survive the pandemic.

“Although Government support has continued to provide a lifeline for many businesses which would have otherwise struggled in an economic climate like this, this July was still a challenging month.

“The delay in lifting the final restrictions will have hit trading, footfall and spending, and a huge number of firms have spent 15 months trading in conditions that are wildly different to normal.

“With the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than they were in 2019, the future does look more optimistic. Having said that, it will take longer for the worse-hit sectors to recover from the pandemic.

“SMEs are the backbone of the UK economy, but many have been badly affected by the pandemic. The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.

“There is no shame in management asking for support or advice – and R3 members are ideally placed to provide it. Many of them will give an hour’s free consultation to firms that want to know more about their restructuring or insolvency options, so they can understand the situation the business is in and explain the potential solutions for improving it.

“It’s a really tough thing to talk about, but discussing your financial concerns as they emerge or in their early stages means you have more potential solutions open to you and more time to determine which of these is best for you.”