The number of insolvent businesses in England and Wales has risen by over a third to hit a three-year high, with company directors choosing increasingly to shut down their companies voluntarily.
This is according to the Midlands branch of insolvency and restructuring body R3 and follows statistics published this week [18/4/23] by the Insolvency Service which show that corporate insolvencies rose by 37.7% in March to 2,457 compared to February’s total of 1,784, and by 15.9% in comparison with March 2022’s figure of 2,120.
The government statistics also show that corporate insolvencies in England and Wales increased by 145.9% against March 2021’s total of 999, and by 99.3% compared to 1,233 in March 2020.
R3 Midlands committee member Stephen Rome, a director at Thursfields Solicitors in the region, said: “The rise in corporate insolvencies – to the highest levels for more than three years – has been driven by increasing numbers of Creditors’ Voluntary Liquidations, which are also at a three-year high.
“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 by a turbulent trading climate.
“Companies across the region are struggling at the moment. 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.
“With the Government’s Energy Bill Relief Scheme finishing at the end of March, many businesses will be facing further increases in costs at a time when they can barely afford them.
“Directors need to be vigilant about the signs of financial distress and seek advice as soon as they spot them. Cashflow issues, payment delays and rising stock are all red flags. The earlier business owners seek help, the more options there are available to address the challenges they face.”
