There were 2,384 company insolvencies registered in England and Wales in the first quarter of 2021 – a 22 per cent fall in the number of company insolvencies registered in the previous quarter and a 38 per cent drop from the same quarter of 2020.
These corporate insolvency numbers continue the trend seen since the start of the first UK lockdown in March 2020. The continuing low level is likely to be partly driven by Government measures in place in response to the COVID 19 pandemic.
The measures include temporary restrictions on the use of statutory demands and certain winding-up petitions, which has significantly reduced the number of compulsory company liquidations since March 2020, and enhanced Government financial support for businesses.
The overall decrease in company insolvencies in Q1 this year was mainly driven by a drop in creditors’ voluntary liquidations (CVLs), which accounted for 86 per cent of all company insolvencies. These fell by 18 per cent from Q4 2020 and were 24 per cent lower than during the same quarter last year.
These quarterly figures are adjusted to account for seasonal variation in insolvencies across the year and to allow for comparison to the most recent period within years. However, taken monthly, corporate insolvencies increased by 44.8 per cent to 992 in March 2021 compared to February’s figure of 685, although this is still 19.7 per cent lower than March 2020’s figure of 1,236.
This figure would suggest that economic damage caused by the pandemic is starting to reflect in insolvency levels and that Government support may have only postponed the true picture, which is now being revealed.
For help and advice on matters relating to corporate insolvencies or liquidation, please contact our specialist, Richard Warwick at Milsted Langdon today.