The Telegraph quotes Roger Elford on the increase of company insolvencies in November
The number of registered companies in England and Wales going insolvent was 21 per cent higher in November than a year ago, newly published data by The Insolvency Service reveals.
There were 2,029 company insolvencies in November across England and Wales, against 1,676 in November 2021, The Insolvency Service said. The Insolvency Service statistics also showed there were 290 compulsory liquidations last month, five times more than in November 2021.
Roger Elford, Partner, comments on the statistics for The Telegraph and This is Money. He says:
“Against the economic and political backdrop and alongside the “debtor friendly” measures that were introduced by the UK Government in response to the pandemic having largely been lifted, company insolvencies are now at a stubbornly high level (2,029 in November 2022) when compared to recent years. This is perhaps unsurprising when you combine a period of relative inactivity (as a result of the measures introduced by the UK Government) with the scales of supply and demand now being impacted by inflation, rising imports and energy costs, foreign exchange headwinds and interest rate movements continuing to bite.
For the reasons outlined above, it is also perhaps unsurprising that the number of compulsory liquidations (290 in November 2022) was 5 times as many as in November 2021 and 7% higher than in November 2019. Unfortunately, businesses find themselves in a quandary – they need to preserve cash but also shore up the payment pipeline from customers thus creating somewhat of a “perfect storm”. This is likely to get worse in the winter season where certain industries will come under increasing pressure to balance the demand of the festive season against rising costs. Unfortunately, the present outlook is not all that rosy and UK insolvencies, particularly compulsory liquidations, are expected to increase in the short term.
Following the reinstatement of HMRC’s preferential creditor status at the end of 2022, it is not surprising that the use of CVAs as a restructuring tool has not recovered to pre-pandemic levels. It remains to be seen whether we’ll see a wholesale increase in the use of companies in distress turning to restructuring plans instead as a means of rescue, which were ushered into force at the height of the pandemic but where take up to date has been muted.”
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