The number of company directors voluntarily taking their businesses into liquidation increased by 37 per cent in December 2021 compared to the same month of the previous year.
A total of 1,365 Creditors’ Voluntary Liquidations (CVLs) were recorded across England and Wales in December, which is down on the figure for November but significantly up compared to December 2020.
The number of CVL cases in December last year is also around 73 per cent higher than the comparable figure for the final month of 2019, prior to the start of the pandemic.
Although there was a month to month decline in CVLs in December, the sense among insolvency experts is that current economic conditions mean a significant number of company directors across England and Wales are deciding to enter their businesses into liquidation themselves.
“December marked a tough end to a torrid year for many businesses,” said Christina Fitzgerald, the vice president of the insolvency and restructuring trade body R3.
“The economic situation is pushing many company directors to voluntarily close their businesses before that decision is made for them.”
Detailing some of the challenges that British businesses have been faced with in recent months, Ms Fitzgerald cited rising costs, falling consumer confidence and issues relating to the ongoing coronavirus crisis.
She pointed out that the sharp rise in Covid-19 cases across the UK towards the end of 2021 and the public health measures made necessary by them had an obvious impact on how businesses were being run in the weeks before Christmas.
“Company directors and management teams had to work in the midst of new Covid restrictions,” said Ms Fitzgerald, “which will have affected day-to-day operations, customer behaviour and revenue levels”.
“This is especially true in sectors like retail and hospitality, who normally have their busiest periods in December, but faced an unhappy Christmas this year.”
The advice from R3 to company directors is to “remain alert” and on the lookout for signs that their businesses might be in or close to a position of financial distress.
If those signs are in evidence then there are clear benefits to seeking expert guidance on the options available sooner rather than later.
