Tuesday, October 19, 2021

Latest insolvency stats show pandemic continues to hit hard on local businesses

Despite the relaxing of Covid restrictions and the positive impact on the economy of the Government’s vaccination programme, the pandemic continues to take its toll on local businesses, with many under greater pressure to survive compared to this time last year.

The warning comes from the Midlands branch of insolvency and restructuring body R3 and follows latest statistics published by the Insolvency Service which show that corporate insolvencies in England and Wales increased by 22.9% to 1,348 in August compared to July’s figure of 1,097, and rose by 71.1% compared to August 2020’s figure of 788.

R3 Midlands spokesperson Martin Smith, a director at Dains Business Recovery in the East Midlands, said: “The insolvency figures published this month highlight how tough the current climate is for businesses and the increased pressure the pandemic has exerted on directors over the last 12 months.

“The August increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations. Numbers for this process were 115% higher than this time last year, and 30% higher than in 2019, which suggests that despite the opening up of the economy, there are a number of company directors who are opting to close their businesses after attempting to ride out the pandemic.

“This comes despite the fact that August was one of the better months for trading since the start of the pandemic. The lifting of the final restrictions and the continued impact of the vaccine rollout means that more people are working, shopping and spending, and that looks set to continue as we enter the autumn.  

“With the furlough scheme closing at the end of this month, however, company directors need to be aware of the signs of business distress and seek advice if any of them appear. 

“If a firm has problems paying rent, staff or suppliers, has issues with cashflow, or its directors are concerned about its future, now is the time to seek advice from a qualified professional, rather than waiting until the problem worsens.”

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