The number of business failures fell in April, following a year of low insolvency levels in which Government support measures have kept many firms afloat.
The figures released today by the government’s Insolvency Service show there were 925 company insolvencies in April – 7% lower than the previous month and 23% lower than the same month last year.
However with support measures being phased out and the ban on winding-up orders due to finish at the end of June, companies are being urged to make the most of the time left to plan for their future survival.
Allan Cadman, North West chair of R3, the insolvency and restructuring trade body, says: “”We now have a year’s worth of pandemic insolvency figures, and it’s clear the Government’s support measures have prevented a significant number of businesses from becoming casualties of Covid-19.
“The big question is what will happen to insolvency numbers as we come out of the pandemic, but there are too many variables to say with much certainty.
“Government has a challenge on its hands in terms of managing the exit from lockdown and the withdrawal of financial support. How it handles this will help to determine if there is a sharp spike of business failures or simply a smoother return to pre-pandemic insolvency levels.”
Allan, who is also a partner at insolvency firm Poppleton & Appleby, said the situation was still tough for many businesses: “While spending is increasing, it’s still below 2019 levels and consumer confidence remains low. The temporary ban on winding-up petitions is due to finish at the end of June, and other Government support schemes are due to be withdrawn in the next few months, which will clearly increase pressure on struggling firms.
“Company directors need to make the most of the time they have left to plan for the future and work out how they will manage without state support. Businesses which are struggling should seek professional help.”