Home Finance & Investments R3 responds to August 2021 insolvency figures

R3 responds to August 2021 insolvency figures

Eleanor Temple, Chair of insolvency and restructuring trade body R3

Eleanor Temple, chair of insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to Friday’s (17 September 2021) publication of the August 2021 corporate and individual insolvency statistics for England and Wales:

“The insolvency figures published today highlight how much tougher the climate is for businesses and individuals than this time last year, and the toll the pandemic has taken on business and personal finances over the last 12 months.

“The increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations (CVLs). Numbers for this process were 115% higher than this time last year, and 30% higher than in 2019, which suggests that despite the opening up of the economy, there are a number of company directors who are opting to close their businesses after a year and a half of trading in a pandemic.

“This comes despite the fact that August was one of the better months for businesses since the start of the pandemic. The lifting of the final restrictions and the continued impact of the vaccine rollout means that more people are working, shopping and spending, and that looks set to continue as we enter the autumn.

“However, with the furlough scheme closing at the end of this month, company directors need to be aware of the signs of business distress and seek advice if any of them appear.

“If a firm has problems paying rent, staff or suppliers, has issues with cashflow, or its directors are concerned about its future, now is the time to seek advice from a qualified professional, rather than waiting till the problem has become worse.

“On the personal insolvency side, while the figures published today show a small increase in the total number of personal insolvencies compared to the previous month, it’s too early to tell whether this is a definite trend.

“However, personal insolvencies have risen sharply compared to this time last year. This has been driven by an increase in the number of Individual Voluntary Arrangements, which could be more of an indication that people are seeking and receiving help with their financial issues, rather than necessarily showing that personal insolvency levels are rising.

“It has been a tough 18 months for the nation’s personal finances, but the situation appears to be improving. Unemployment is down and job vacancy numbers are at their highest for 20 years, but there is likely to be some concern among consumers around their job stability as furlough ends and the prospect of future lockdowns is mooted as we reach the winter months.

“The best thing anyone who is worried about their personal or business finances can do is seek advice as soon as they become concerned. Doing so typically gives you more options, more time to make a decision about your next step and a better outcome than if you’d waited and let the problem spiral.”