The number of voluntary liquidation cases in England and Wales were up by 9 per cent in March as compared to the same month of last year.
According to official data from the Insolvency Service, there were 2,011 Creditors’ Voluntary Liquidation (CVL) cases recorded in March 2023, which is the highest number seen for over three years.
The view from experts is that economic conditions and operational headwinds are currently such that a growing number of company directors are taking the decision to voluntarily enter their businesses into liquidation.
“Business owners have spent three years trading through a pandemic and economic uncertainty, and an increasing number are choosing to shut their businesses before that choice is taken away from them,” commented Christina Fitzgerald, president of the insolvency and restructuring trade body R3.
Another big issue for a lot of companies currently is the scaling back of UK government support in relation to energy bills, which for many businesses have become a huge financial headache in recent quarters.
“Costs continue to rise at a time when consumers are cutting back on discretionary spending, and when staff are requesting pay rises to cover their bills,” noted Ms Fitzgerald.
The advice from R3 is that company directors who fear they might soon need to enter their businesses into liquidation should seek expert guidance on the options available sooner rather than later.
“Directors need to be vigilant about the signs of financial distress and seek advice as soon as they spot issues with their business or begin to worry about its finances,” says Ms Fitzgerald.
“If stock is starting to pile up, cashflow is an issue, or the business is having problems paying rent, staff or suppliers, now is the time to seek advice, rather than further down the line when these issues have evolved into problems.”
While there were over 2,000 CVL cases recorded in March this year in England and Wales, there were also 288 cases of compulsory liquidation, which is more than double the comparable figure for March 2022.
The increase in compulsory liquidation cases is attributed by the Insolvency Service in part to the growing number of winding up petitions being presented by HMRC.
