East Midlands businesses are being urged to take swift action if their finances are under pressure after new Government figures reveal corporate insolvencies have hit their third highest monthly total since the start of the pandemic.
The warning comes from insolvency and restructuring body R3 and follows statistics published by the Insolvency Service which show that corporate insolvencies in England and Wales increased by 19% to 1,207 in June 2021 compared to May’s figure of 1,014, and rose 62.9% compared to June 2020’s figure of 741.
R3 Midlands Chair Eddie Williams, a partner at PwC in the region, said: “The surge in corporate insolvencies between May and June has been driven by a rise in Creditors’ Voluntary Liquidations (CVLs).
“The necessary delay in lifting final COVID restrictions for another month has had a severe impact on certain businesses. The hospitality and retail sectors, for example, have been hit hardest by trading restrictions and lockdowns.
“It may be that this impact has been reflected in these latest statistics as the rise in CVLs, used by directors to close a company voluntarily, suggests that the delay to the removal of the restrictions may have simply made it uneconomic to continue trading.
“R3 Midlands is encouraged, however, by the Business Secretary’s recent comments on HMRC’s planned approach to working with distressed businesses. In particular, the news that HMRC will take a supportive approach to rescue proposals from viable businesses is welcome, and we hope will strengthen the profession’s efforts to support COVID-hit firms.
“Anyone who is concerned about their business should seek advice from a qualified source as soon as possible. Taking the initiative, rather than avoiding the issue, will provide more options and more time to consider the next step.”