Recent figures from the Insolvency Service show a 23 per cent fall in corporate insolvencies in April this year compared with the same month in 2020 and a 35 per cent fall from April 2019.
This year’s April figures were made up of a total of 925 registered company insolvencies, comprised of 819 Company Voluntary Liquidations (CVLs), 26 compulsory liquidations, 75 administrations and 5 Company Voluntary Arrangements (CVAs).
Despite the fall in corporate insolvencies, business owners are urged to remain on top of their finances, as the industry believes that the Government’s support measures have merely delayed the inevitable.
Insolvency levels are likely to rise once state funding ends and creditors can enforce their rights, so business owners must watch their cash flow and avoid over-trading.
Most importantly, if they were not in good financial shape before the pandemic, they should start planning for the second half of the year and seek advice if they believe they will struggle in the coming months.
Worryingly, Individual Voluntary Arrangements (IVAs), used by people in personal financial difficulty, rose by 22 per cent for the three months to the end of April 2021, compared to the three months ending April 2020.
This rise suggests that personal finances are coming under increasing pressure, and could mean that company owners and directors who have been unable to access Government support, as well as those that have lost their jobs, are now struggling financially.
For help and advice on related matters, please contact our Insolvency Partner Tim Close today.