Voluntary Liquidation Rates Up to Highest Levels in Almost 3 Years
The rates at which companies in England and Wales were being placed into liquidation on a voluntary basis increased to the fastest pace since January 2019 during September of this year.
According to the latest official figures released by the Insolvency Service, there were 1,328 instances of companies entering a Creditors’ Voluntary Liquidation (CVL) in September 2021.
CVLs were by far the most common form of corporate insolvency recorded last month, with most other forms of liquidation remaining a relative rarity across England and Wales.
The overall number of all types of corporate insolvency recorded last month totalled 1,446, which is a figure 56 per cent higher than the comparable number for September 2020.
However, there were restrictions in place last year that prevented creditors from pursuing their debtors through the courts.
The recent removal of those restrictions is regarded by the Insolvency Service and other experts as the key reason why a rise in corporate insolvency and CVL cases can be expected in the final few months of 2021.
Various financial support mechanisms created by the government to help keep employers in business during the pandemic have also been removed recently, which could also impact on insolvency rates in the coming months.
The insolvency and restructuring trade body R3 has said the latest figures on insolvencies and liquidations reflect the ongoing toll that the pandemic has been taking on the finances of businesses and consumers across the UK.
R3’s deputy vice president Nicky Fisher has said: “The monthly increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations, which increased for the third consecutive month.
“This suggests that directors are choosing to close their businesses after deeming their financial survival unlikely after 18 months of trading through a pandemic.”
Mr Fisher also noted that the supply chain disruption and energy price increases of recent weeks have added to the financial pressures that businesses are under as they look to recover from the Covid crisis.
The advice from R3 is for company directors worried about their cashflows and their financial prospects in general to seek out expert help and support if ever they need it.