A significant increase in the number of company directors taking their businesses into liquidation prompted a sharp rise in corporate insolvency cases across England and Wales in November 2021.
Indeed, the uptick in Creditor Voluntary Liquidations (CVLs) has taken overall corporate insolvency rates to their highest level for a single month since January 2019 and before the pandemic began.
According to the Insolvency Service’s official data, 1,674 companies became insolvent last month, of which 1,521 were CVLs, with the others being compulsory liquidations or cases of administration.
The figures for CVLs in November represents a huge jump from the same month last year and a 43 per cent increase compared to the same month in 2019.
Christina Fitzgerald from the insolvency and restructuring trade body R3 has said the increase in CVLs in recent weeks reflects the extent of the challenges that a growing number of company directors in the UK are experiencing.
“The increase in the use of this process suggests that a rising number of company directors are choosing to close their businesses, perhaps because they feel that survival is impossible in the current climate,” she said.
“Times are tough for businesses in England and Wales as the pandemic continues to take its toll on the economy and the firms that drive it.”
Ms Fitzgerald pointed out that recent weeks have seen businesses impacted concurrently by rising costs, issues within their supply chains and an increasing number of Covid-19 cases.
Another problem facing businesses in the run up to Christmas has been declines in consumer confidence and a slow down in growth across the economy as a whole.
The advice from R3 for any director concerned about their company’s financial prospects in the short or medium term is to get expert advice on all the options available.
“Seeking advice at an early stage provides more options, more time and potentially better outcomes for businesses than if it’s delayed,” explains Ms Fitzgerald.
“Most insolvency practitioners will give an hour’s free consultation to potential new clients to learn about the situation they are in and outline their potential options for improving it,” she added.
