The number of business insolvencies has exceeded pre-pandemic levels for the first time since before the first lockdown, according to the latest official figures.
The figures from the Insolvency Service show there were 1,674 business insolvencies in November – 88% higher than the same month last year and 11% higher than in November 2019.
The rise has been driven by an increase in Creditors’ Voluntary Liquidations (CVLs), a procedure where company directors close their business voluntarily, and which now stand at the highest levels in more than two and a half years.
Allan Cadman, a North West insolvency expert who is also regional chair of the insolvency and restructuring trade body R3, says: “The increase in the use of CVLs suggests that a rising number of company directors are choosing to close their businesses, perhaps because they feel that survival is impossible in the current climate.
“Times are tough for businesses in England and Wales as the pandemic continues to take its toll on the economy and the firms that drive it. Over the last few weeks, businesses have been hit by the triple whammy of increased costs, supply chain issues and rising COVID cases.
“They have also been operating in the face of low consumer confidence and anaemic economic growth in recent months, which, coupled with an increasingly difficult COVID situation, has led to changes in people’s shopping and spending habits and taken its toll on revenue levels.
“It remains to be seen how the introduction of Plan B will affect the economy in the short and medium term, but we know it will affect footfall, spending and operations at a time when many businesses would have been hoping for a busy Christmas period to help after a challenging year.”
Allan, who is also a partner at insolvency firm Poppleton & Appleby, adds: “We urge any director who is worried about their business to seek advice as soon as possible. Seeking it at an early stage provides more options, more time and potentially better outcomes for businesses than if it’s delayed – and most insolvency practitioners will give an hour’s free consultation to potential new clients to learn about the situation they are in and outline their potential options for improving it.”
