A perfect storm of tough conditions is being blamed for an increase in liquidation cases across England and Wales in recent weeks.
The number of companies being forced into compulsory liquidation and the number of Creditors’ Voluntary Liquidation (CVL) cases both increased notably during November.
A total of 1,595 CVL cases were recorded in November this year, which represents a 5 per cent increase compared to the same month of 2021 and a 50 per cent jump compared to November 2019.
Meanwhile, the number of compulsory liquidations increased by as much as 437 per cent between November 2021 and the same month this year, which the Insolvency Service has attributed in large part to “an increase in winding up petitions being presented by HMRC”.
As far as the UK’s insolvency and restructuring trade body R3 is concerned, a growing number of businesses are “buckling under the strain of more than two and a half years of economic turmoil”.
Christina Fitzgerald, R3’s president, said in response to the latest liquidation data: “What we’re seeing here is a perfect storm of creditors pursuing unpaid debts and directors choosing to close down their businesses - either before this choice is taken away from them or because they have simply run out of road.
“Companies have been battered by the pandemic, rising costs, reduced spending and increasing inflation, and a growing number are now turning to an insolvency process to resolve their financial distress.”
Ms Fitzgerald also warned that the final few weeks of the year may not provide the festive cheer that consumer-facing businesses would normally be hoping for.
“For many businesses, the Christmas and post-Christmas period is a critical part of their year and the time when a large percentage their revenue is generated,” she explained.
“However, given how stretched people’s finances are this year, it remains to be seen whether this will be a happy Christmas or a final one for these firms.”
Ms Fitzgerald advises any company directors concerned about their business’ financial prospects and ongoing viability to seek expert help and guidance at the earliest opportunity.
“Our message to anyone worried about money or worried about their business is: seek advice as early as possible,” she said.
