Eleanor Temple, chair of insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments on the first publication of the Government’s monthly corporate and individual insolvency statistics:
“The first set of monthly insolvency figures do not yet provide a particularly clear picture of how the pandemic is affecting insolvencies. Nevertheless, we welcome the Government’s decision to publish figures for insolvencies monthly rather than quarterly for the period of the pandemic, as these numbers will give more immediate feedback on how businesses, consumers and the wider economy are being affected.
“The figures published today show corporate insolvency numbers fell very slightly between March and April, while there was a significant month-on-month increase in individual insolvencies, largely driven by a doubling of numbers of Individual Voluntary Arrangements (IVAs).
“As the Insolvency Service notes, there are several complicating factors at play: some corporate insolvency procedures take time to get underway, while the changes to the normal operating of the courts have meant many civil proceedings have been halted. The Government’s support measures and policies for businesses and individuals have undoubtedly helped many stay afloat. Additionally, companies which planned for disruption in the case of a no-deal Brexit may find their preparations coming in handy to tackle disruption from a different source.
“Our members are telling us the enquiries they are receiving are mainly for advice and support, rather than necessarily for COVID-induced insolvency processes. Directors want to understand how to manage their cashflow and what options are open to them operationally, consumers want advice, and both groups want to understand the finer points of the Government’s support measures and what they mean for their circumstances. The corporate insolvency procedures which have been initiated since the pandemic hit, meanwhile, are mostly those of companies which were already in financial distress pre-lockdown, for whom the freezing of normal operations delivered a final blow.
“Now more than ever, anyone worried about their own or their company’s financial situation should seek advice urgently, from a professional and reputable source. With ‘business as usual’ an unknowable way off, making plans to navigate the disruption the pandemic has caused will be vital.”