A fall in the number of business insolvencies in June may only be a temporary respite, a leading North West insolvency expert has warned.
Allan Cadman, who is North West chair of the insolvency and restructuring trade body R3, says that insolvency numbers are likely to rise in the months ahead as economic pressures start to pile.
The latest insolvency statistics show that there were 1,691 business insolvencies in June – seven per cent lower than in May but 40% higher than in June last year and 15% higher than in June 2019 before the pandemic.
Allan, who is also a partner at insolvency firm Poppleton & Appleby, said the month-on-month fall had mainly been driven by a reduction in Creditors’ Voluntary Liquidations (CVLs), a procedure where directors of insolvent firms choose to close their company voluntarily.
“The month-on-month fall in corporate insolvencies matches May’s unexpectedly positive GDP figures. However business owners should not be complacent given the ongoing economic pressures which will start to be felt in insolvency numbers in the next few months,” he says.
“Despite these positive statistics, inflation continues to have an impact on all aspects of business with input costs and overheads heading in the wrong direction. Not only are directors facing immediate strain to deal with this inflationary pressure, but they will also be looking at re-evaluating investment decisions and wider business strategies in the medium-term. This is likely to act as a further drag on the economy in the months ahead.
“At the same time, consumer confidence has hit its lowest point since the start of the pandemic, bringing down consumer spending, which could mean that sectors such as travel, retail and hospitality could particularly struggle as these are the things people usually cut first.
“Anyone who is worried about their business finances should seek advice as soon as possible. Having the conversation at an early stage will give you more potential options.”
