INSOLVENCY STATISTICS: Southern and Thames Valley R3 chairman Garry Lee
Annual figures suggest that more directors are voluntarily shutting down their businesses, according to the R3 trade body for restructuring and insolvency professionals in the South and Thames Valley.
The newly published statistics for 2021 showed that corporate insolvencies in England and Wales were up by more than 10 per cent on 2020 but remained below pre-pandemic levels.
They were driven by a rise in Creditor’s Voluntary Liquidations (CVLs), which reached their highest since 2009.
The figures – published by The Insolvency Service – showed:
- There were 14,048 underlying corporate insolvencies in 2021 – an increase of 11.2% from 2020’s figure of 12,634, but a fall of 18.2% on 2019’s figure (17,166)
- There were 110,022 personal insolvencies in 2021 – a fall of 1.4% on 2020’s figure of 111,578, and a fall of 9.9% compared to 2019 (122,155)
Garry Lee, chair of R3’s Southern and Thames Valley region, said: “The increase in annual corporate insolvencies has been driven by a rise in Creditor’s Voluntary Liquidations (CVLs), which reached levels not seen since 2009.
“The increase this year – and the surge in CVLs in the final quarter of 2021 – suggests that many directors are opting to close their businesses as they lack confidence in their trading prospects in the current climate.
“Furthermore, these businesses may also be facing pressure from creditors who were previously unable to take enforcement action but are now able to do so after the lifting of some restrictions.
“And while insolvencies still haven’t reached pre-pandemic levels, this is unlikely to remain the case for long.”
Garry, who is an associate director in the recovery and restructuring services department at accountancy firm Smith & Williamson’s Southampton office, added: “Given the current climate, we urge company directors in the South and Thames Valley to be aware of the signs of financial distress if any present themselves.
“Our message is a simple one: if you’re having problems paying staff or suppliers, your stock levels are piling up, or you’re worried about paying your rent or your tax debts, or your business’ finances or future, seek help from a qualified and regulated advisor as soon as possible.”
The annual fall in personal insolvencies was due to an overall decline in the number of bankruptcies and Debt Relief Orders.
Individual Voluntary Arrangement numbers increased, which suggests that more people are seeking help with their debts and coming to an agreement with their creditors without having to go down the bankruptcy route.
Garry added: “Anyone who is worried about their finances should seek advice now rather than letting their problems spiral.
“We know it can be incredibly hard to talk about money, but it’s better to have the conversation as soon as you can, so you have a broader range of options and time to make a considered decision about your next steps.”
ENDS
