Number crunching times
Looking at the most recent figures on corporate insolvencies makes for worrying reading for landlords and occupiers alike, with overall numbers now exceeding pre-pandemic levels. Overall, corporate insolvencies increased by 17% in England and Wales since February 2022 and were a third higher than in February 2020.
This picture is unsurprising as businesses struggle to deal with increased costs - including borrowing - and a stuttering economy. There will also inevitably be some "delayed reaction" here from the protection given to businesses by government measures during the pandemic, some of which only ended in autumn last year.
There is a mixed picture amongst the detail of the figures. For example, the numbers of administrations and Company Voluntary Arrangements (CVAs) has actually remained lower than before the pandemic. However, this may perhaps be a concern in itself given that these insolvency mechanisms are aimed at trying to rescue businesses rather than bringing them to an end.
It is certainly true that compulsory liquidations and creditors' voluntary liquidations are mostly responsible for the overall increase in corporate insolvencies during the past 12 months - although some interrogation of the detail is worthwhile, e.g. with the data showing that HMRC has presented more winding-up petitions in recent times. Nonetheless, with the rather limited measures for businesses in the recent Spring Budget and the government's decision to press on with the introduction of the 25% corporation tax rate, companies will be bracing themselves for more challenging times ahead.
The different forms of corporate insolvency have varying effects on landlords' rights to terminate tenancies and/or pursue arrears. Readers may therefore want to remind themselves of how the various forms of insolvency operate and their potential impact on landlords' remedies.
These points are covered by our podcasts which can be downloaded via the links below:
Property Patter: The last resort – FAQs on tenant liquidation | Charles Russell Speechlys
Property Patter: The trendy option – FAQs on tenant CVAs | Charles Russell Speechlys
Property Patter: the whys and wherefores of receivership | Charles Russell Speechlys
Of the 1,783 registered company insolvencies in February 2023:
There were 1,505 CVLs, which is 13% higher than in February 2022 and 59% higher than in February 2020; 158 were compulsory liquidations, which is more than twice the number in February 2022, but 32% lower than February 2020; 12 were CVAs, which is four times higher than February 2022, but 37% lower than February 2020; There were 108 administrations, which is similar to February 2022, but 27% lower than February 2020; There were no receivership appointments.
