The number of business insolvencies rose by 7% in September compared to the previous month and by 56% compared to the same month last year, according to official figures released today.
The increase was driven by a rise in Creditors’ Voluntary Liquidations (CVLs), a procedure where company directors choose to close their business voluntarily. The figures from the Insolvency Service show there were 1,446 company insolvencies in September, of which 1,328 were CVLs.
Allan Cadman, a North West insolvency expert who is also regional chair of the insolvency and restructuring trade body R3, says the latest figures show the economic effects of the pandemic are continuing to take a toll on businesses.
“The dramatic increase in corporate insolvencies compared to this time last year – to the highest level since January 2020 – illustrates just how crucial the Government’s support has been in keeping businesses afloat and suggests that there may be a rocky road ahead for the business community now it has ended.
“The increase in Creditors’ Voluntary Liquidations, which increased for the third consecutive month, suggests that directors are choosing to close their businesses after deeming their financial survival unlikely after 18 months of trading through a pandemic.
“Despite the fact that businesses have benefitted from two months of restriction-free trading and the economic boost over the summer, conditions are still not back to where they were before the pandemic.
“Consumers are now increasingly cautious about the state of the economy, their personal finances and the increased cost of living and are more wary about spending their money.
“And with widespread supply chain disruption and significant wholesale energy price increases building up between September and October, there is likely to be little slack in the system for businesses and individuals who have yet to get back on their feet following the impact of COVID.
Allan, who is also a partner at insolvency firm Poppleton & Appleby, adds: “Anyone worried about their finances – business or personal – should seek advice at the earliest possible opportunity. This will mean you have more potential solutions available and more time to take a qualified decision about which of them is right for you.”