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Voluntary Liquidation Rates Fall But Pressures Mount on Company Directors

By Jon Munnery
25 July 2022

Rates of Creditors’ Voluntary Liquidations (CVLs) fell during June in England and Wales but pressures are nonetheless mounting on company directors.

According to official figures from the Insolvency Service, there were a total of 1,691 cases of liquidation in June, with most of those being instances in which directors took their businesses into liquidation voluntarily.

Those numbers represent a drop compared to CVL rates for May but there is no doubt that businesses across the UK economy are significant under pressure at present.

High on the list of concerns for most company directors is inflation, with price rises squeezing the cashflows of operators across industries and pushing some towards insolvency and potential liquidation.

Despite liquidation rates having fallen from May to June this year, the insolvency and restructuring trade body R3 has warned company directors not to be complacent given the scale of challenges they’re likely to face in the coming months.

Nicky Fisher, R3 vice president, has said: “Despite these positive statistics, inflation continues to have an impact on all aspects of business with input costs and overheads heading in the wrong direction.

“Not only are directors facing immediate strain to deal with this inflationary pressure but they will also be looking at re-evaluating investment decisions and wider business strategies in the medium-term. This is likely to act as a further drag on the economy in the months ahead.”

Ms Fisher went on to point out that consumer confidence has slumped in recent months which has restrained consumer spending and added to the financial pressures being felt particularly by operators within the retail, travel and hospitality sectors.

The trade body UKHospitality recently reported that inflation is having a huge impact on the finances of businesses across its industry and leaving a growing number of those operators fighting for survival.

Nicky Fisher from R3 has emphasised specifically that anyone concerned about their own or their company’s financial situation should reach out for expert advice as soon as they need it.

“Talking about your money worries can be a challenging conversation to have but seeking early advice gives you more potential options and more time to make a decision about what’s best for you,” she said in response to the latest official figures on CVLs across England and Wales.

Jonathan Munnery
Insolvency & Restructuring Expert
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