The number of corporate insolvencies fell by 9% to 686 in February 2021, compared to January’s figure, and were 49% lower than the 1,348 recorded in February 2020.
Compared with February 2020’s figures, this year, compulsory liquidations were 86% lower and Creditors’ Voluntary Liquidations (CVLs) were down by 38%. Meanwhile, there were 68% fewer Company Voluntary Arrangements (CVAs) and Administrations were down by 62% year on year.
According to the Insolvency Service, the overall reduction in company insolvencies is likely to be in part driven by the range of Government support measures put in place to financially support companies in response to the coronavirus pandemic.
For example, policies have allowed businesses to delay some tax payments, take out Government-backed loans and put their staff on Government-paid furlough. In addition, there have been temporary restrictions on winding-up petitions, preventing those people and firms who are owed money taking action to recover debts.
Personal insolvencies also fell, with an 18% drop to 6,816 in February 2021, compared to January’s figure and a 21% fall compared with the figure recorded in February 2020.
However, while the fall in personal insolvencies was because of a slump in Individual Voluntary Arrangements (IVAs), there was a month-on-month increase in both bankruptcies and Debt Relief Orders, which may be indicators of more severe debt problems than IVAs.
While the fall in corporate insolvencies is good news, business owners must continue to address the difficult economic time the UK is facing, be planning ahead for when the Government’s measures come to an end and should take professional advice early if they foresee any problems arising.
For help and advice on matters relating to corporate insolvencies or liquidation, please contact our specialist, Richard Warwick at Milsted Langdon today.