Insolvency figures released today for October 2021* by the Government’s Insolvency Service show a 63% increase in corporate insolvencies compared to the same month last year (1,405 in September 2021 and 864 in October 2020). However they were 5% lower than the number registered two years previously (pre-pandemic; 1,480 in October 2019).
In October 2021 there were 1,248 Creditors’ Voluntary Liquidations (CVLs), which is slightly higher than pre-pandemic levels. The number of registered company insolvencies was similar to pre-pandemic levels, driven by this higher number of CVLs, although other types of company insolvencies, such as compulsory liquidations, remained lower.
Challenging winter ahead as corporate insolvencies forecast to rise
Leading restructuring and insolvency professional, Oliver Collinge from PKF GM in Leeds said: “The surge in corporate insolvency numbers is not surprising. Many businesses have now started to repay BBLS and CBILS loans as well as deferred HMRC liabilities and the final Government support measures have now ended.”
“Cash flow pressures due to the well documented issues around higher inflation, staff shortages, increasing energy prices, supply chain challenges and the need to repay Covid incurred debt, is likely to lead to increased numbers of insolvencies in Yorkshire over the next 12 months.”
“These challenges will put multiple added pressures on businesses in the coming months, particularly those that weren’t in robust financial health before Covid, so it’s critical businesses act early and seek advice if they are struggling now, or think cash flow may be squeezed in coming months. The earlier they act, the more options they’ll have to continue trading and recover.”
“The biggest increase can be seen in Creditors’ Voluntary Liquidations, where directors have chosen to place their business into an insolvency process. In part this may be because creditors can now take enforcement action, forcing directors to take action. The number of administrations also continues to creep up, which could offer insight into the health of UK companies. Administration has hopefully been selected as an alternative to liquidation as it has been possible to rescue the business.”