The Insolvency Service paid out a record £453.4 million in missing wages and benefits to workers at firms that collapsed in 2020, according to a Freedom of Information (FoI) Act request.
The payments were the highest in a decade and were made up by £297.5 million being paid out in redundancy pay, £93.3 million for months that would have been earned working a notice period, £28.4 million on unpaid holiday pay and £34.2 million on outstanding payments for wages, overtime and commission owed.
However, while the amount of the payouts increased by 31 per cent on 2019’s £346.1 million, the various company lifelines provided by Chancellor Rishi Sunak over the period meant that the number of firms going insolvent fell by 27 per cent on 2019’s figures.
Despite this intervention, there were significant job losses across the high street, particularly in retail, with more expected this year and a record-breaking 35 per cent of UK firms issuing their third consecutive profit warning in 2020.
A recent report has revealed that the number of UK listed companies at risk of insolvency has doubled. There was also a surge in the number of companies issuing three or more profit warnings in a 12 month period, which is a warning sign for future insolvency.
According to the report, 62 firms issued their third profit warning, double the total in 2019, with retail one of the hardest-hit sectors.
As one commentator remarked, while Government support has propped up many firms during the pandemic, their potential insolvency is only likely to have been deferred.
For help and advice on matters relating to insolvency, contact our expert team at Milsted Langdon today.