Insolvencies hit highest level since first Covid lockdown

The number of company insolvencies has risen to the highest level since the first Covid lockdown more than a year ago.

The latest figures from the Insolvency Service show that in August, corporate insolvencies had increased by 71.1% compared to August 2020’s figure of 788.

There was also a large monthly increase of 22.9% to 1,348 in August 2021 compared to July’s figure of 1,097.

Financial experts fear the figures could rise even further over the next few months.

Personal insolvencies increased by 0.2% to 9,106 in August 2021 compared to July’s figure of 9,090, 42.7 % higher than August 2020’s figure of 6,381.

Colin Haig, president of insolvency and restructuring trade body R3, said: “The insolvency figures highlight how much tougher the climate is for businesses and individuals than this time last year, and the toll the pandemic has taken on business and personal finances over the last 12 months.

“The increase in corporate insolvencies was driven by a rise in Creditors’ Voluntary Liquidations (CVLs). 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 a year and a half of trading in a pandemic.

“This comes despite the fact that August was one of the better months for businesses 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.

“However, with the furlough scheme closing, 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 till the problem has become worse.”

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