A major rise in the number of business insolvencies shows that for many firms, it is a challenge simply to break even in the current climate, a leading North West insolvency expert has warned.
The latest insolvency statistics released today show that the number of business insolvencies in April more than doubled year on year and was 39% higher than in April 2019 before the pandemic
Allan Cadman, who is North West chair of the insolvency and restructuring trade body R3, says: “The latest figures reflect the continued toll the economic turbulence is taking on the business community. The boom many were hoping for when pandemic restrictions ended simply hasn’t happened as the UK has moved from one damaging set of economic stressors to another without any time to draw breath.
“Businesses are trying to trade amidst rising inflation, a contracting economy and consumer confidence at a near historic low – lower than during the peak of the pandemic – due to cost of living concerns. Alongside this, rising fuel and energy costs and demands for increased wages from employees mean that it’s a challenge simply to break even at the moment, especially for those businesses who are still reeling from the pandemic. “
The figures, which cover England and Wales, show that there were 1,991 business insolvencies in April, an increase of 115% compared to April 2021. The rise was drive by an increase in Creditor Voluntary Liquidations (CVLs), a procedure initiated by directors of insolvent firms to close their company, which more than doubled since April 2021.
Allan, who is also a partner at insolvency firm Poppleton & Appleby, adds: “It suggests that large numbers of directors lack confidence in their ability to continue trading in the current climate, and are choosing to close their businesses now rather than being forced to in the future.
“Our advice to any directors who are worried about their business is to seek advice and to do it as soon as possible. We know how hard it is to admit a business you’ve worked to build is struggling, but having that conversation at an early point is likely to result in a far better outcome than if you’d waited and the problem had spiralled.”