Rates at which companies entered Creditors’ Voluntary Liquidation (CVL) fell during May compared to April but CVL levels remain way up on the same month last year.
According to the latest official data from the Insolvency Service, there were just over 1,800 cases of corporate insolvency recorded in England and Wales during May, of which almost 1,600 were CVLs.
The figures for CVLs in May 2022 were around 70 per cent higher than the comparable numbers for the same month in 2021 and 66 per cent up on May 2019.
Although the numbers for May reflect a decline in corporate insolvency rates compared to April this year, analysts are clear that financial pressures are mounting for businesses across industries.
For a lot of companies, getting back on an even keel after the travails of the pandemic was a real struggle and inflation is now posing them some major headaches when it comes to making profits and balancing the books.
Evidently, hundreds of company directors across England and Wales are deciding each month to take matters into their own hands and enter their businesses into CVL arrangements before they are forced into insolvency or liquidation through creditor actions.
Christina Fitzgerald, president of the insolvency and restructuring trade body R3, has noted that times are tough for a significant proportion of businesses and their managerial teams.
“There simply hasn’t been time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges,” she said in response to the Insolvency Service’s latest liquidation figures.
“Many businesses who have survived so far are now starting to struggle – and rising interest rates will add extra costs for firms to deal with,” she added.
Rising costs have hit SMEs across the UK economy in recent months but those issues are compounded by the resultant spending restraint generally being shown by consumers, whose outlays so many businesses depend upon for their revenues.
The view from R3 is that company directors who see warning signs of financial distress within their operations should reach out for advice about the options available sooner rather than later.
