Covid effect causes year-over-year increase in bankruptcies in southwest
Business bankruptcies continue to increase year over year according to the South West Insolvency and Restructuring Professional Body R3.
Although the numbers show a slight decline between June and July 2021, this is the third consecutive month in which corporate insolvency levels have increased year-on-year.
R3 said the monthly drop in business bankruptcies was the result of a drop in forced liquidations, voluntary creditors’ liquidations (CVLs), administrations and voluntary company agreements (CVA). However, the year-over-year increase continues to reflect the effect of the Covid pandemic on the business world.
Statistics for July 2021 from the Insolvency Service for England and Wales showed:
Business bankruptcies decreased 9.3% to 1,094 in July 2021 from the June figure of 1,206, and increased 13.4% from the July 2020 figure of 965.
Personal insolvencies decreased 7.8% to 9,079 in July 2021 from the June figure of 9,848 and were 23.8% higher than the July 2020 figure of 7,335.
R3 South West President Philip Winterborne, Partner at Temple Bright Solicitors in Bristol, said:.
âHowever, this is the third consecutive month in which year-over-year corporate insolvency levels have increased, reflecting the effect the pandemic has had on business.
“The 70.4% increase in voluntary liquidations of creditors this month compared to July 2020 suggests that a growing number of directors have decided to shut down their businesses after spending a year trying to survive the pandemic .
“While government support has continued to provide a lifeline for many businesses that would otherwise have struggled in an economic climate like this, July has always been a difficult month.”
Mr. Winterborne added: âThe delay in lifting the final restrictions will have affected trade, attendance and spending, and a large number of businesses in the Southwest have spent 15 months negotiating under very different conditions from the normal.
âWith the economy opening up, consumer confidence at pre-pandemic levels and higher spending levels than they were in 2019, the future looks brighter. That said, it will take longer for the most affected sectors to recover from the pandemic.
âSMEs are the backbone of the UK economy, but many in the South West have been hit hard by the pandemic. The restructuring community is better positioned than ever to help them and other organizations with financial worries, but if administrators leave it too late to seek help, they will have fewer options for rescue or recovery. available to them.
âThere is no shame in management asking for help or advice – and the members of R3 are uniquely placed to provide it. Several of them will give one hour of free consultation to companies who want to know more about their restructuring or insolvency options, so that they can understand the situation in which the company finds itself and explain the potential solutions for the business. ‘to improve.
âOn the personal insolvency side, the monthly decline shown in figures released today is the result of a drop in bankruptcies and individual voluntary arrangements, although the number of debt relief orders has increased. . However, it should be noted that levels of personal insolvency have increased year on year, showing the toll the pandemic is taking on the finances of people in England and Wales. “
While the majority of the Covid support measures are nearing their end, the implementation of the Breathing Space system in May has enabled more than 17,000 people in financial difficulty to discuss the issues they are facing with an advisor in debt, without recourse from creditors. , since its launch. This recent development may be of further support for those who have suffered financially during the pandemic.
Mr Winterborne said: âAs we move into the middle of summer, the number of jobs and vacancies have increased, and more people are returning to work as the leave scheme begins to fall. terminate. However, not everyone has benefited from government support and many have had to borrow or use their savings to pay their bills.
“We recognize that there are a large number of people in the South West who are worried about their finances right now, and the best thing they do – or anyone who is worried about their personal or business finances is. – can do – is to seek advice from a qualified and regulated source.
âIt’s a really hard thing to say. But discussing your financial problems as they emerge, or in their early stages, means you have more potential solutions and more time to figure out which one is best for you.
Oliver Collinge, Restructuring and Insolvency Professional, PKF GM, said: âThis upward trend in the number of corporate insolvencies is not surprising. Last month saw the final foreclosure restrictions lifted and many businesses will now have to start making payments in relation to their BBLS and CBILS loans.
Business Live’s Southwestern business reporter is William Telford. William has over a decade of experience reporting on the business scene in Plymouth and the South West. It is based in Plymouth but covers the entire region.
To contact Guillaume: Email: [emailÂ protected] – Phone: 01752 293116 – Mob: 07584 594052 – Twitter: @WTelfordHerald – LinkedIn: www.linkedin.com – Facebook: www.facebook.com/william.telford.5473
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âWe expect the numbers to continue to rise as the holiday ends and temporary restrictions on the use of certain enforcement actions by creditors are lifted. It is inevitable that the number of insolvencies will at least return to pre-pandemic levels fairly quickly and possibly higher for some time. One of these temporary restrictions, the moratorium on issuing liquidation petitions, is due to end on September 30, 2021, which, if not pushed back, could trigger a surge in corporate bankruptcies. in the coming months, because creditors will be able to assert their rights again.
âThe end of the leave scheme is also scheduled for the end of September 2021, which will put additional pressure on the cash flow of some companies in the region and will likely increase bankruptcies in the last quarter of 2021 and early 2022. There will be several pressures. more on businesses in the coming months, especially those that were not in good financial health before Covid. “