Company insolvencies in England and Wales reached their highest level since January 2019 last month.
A total of 1,674 businesses entered insolvency in November as the figure passed pre-Covid levels for the first time.
Insolvencies – both voluntary and involuntary – were up from 1,410 in October and increased by more than 87% compared to November last year.
The monthly increase is driven predominantly by a rise in Creditor Voluntary Liquidations (CVLs), which reached a two-and-a-half-year peak last month. This increase in voluntary liquidations suggests that many company directors are choosing to close their business, possibly because they think it will be difficult to continue trading under current conditions.
The Insolvency Service figures also include compulsory liquidations and companies that fell into administration.
The number of company insolvencies fell sharply in 2020 when many businesses were kept on life support by government coronavirus support programmes. The pandemic also reduced capacity in the courts and made it harder for creditors to take legal action against companies.
Now, however, at a time when support programmes have been rolled back and court action is returning to pre-pandemic levels, it is becoming harder and harder for many businesses to survive.
Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3, 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.
“Over the last few weeks, businesses have been hit by the triple whammy of increased costs, supply chain issues and rising COVID cases.”
Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency said: “This rapid increase in voluntary liquidations may be a precursor to a much larger number of involuntary insolvency actions. Any business director that is worried about business debt should seek advice as soon as possible. The earlier you seek advice, the more time and options you’re likely to have when it comes to navigating the insolvency rules.”
For more information or advice about company insolvencies, speak to a member of the team today. Call: 0800 611 8888.