Eleanor Temple, chair of insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to the publication of the April 2021 corporate and individual insolvency statistics for England and Wales:
"The monthly fall in corporate insolvency numbers shown in the figures published today has been driven by a drop in Compulsory Liquidations and Creditors’ Voluntary Liquidations.
"On the personal insolvency side, the month-on-month drop in numbers is a result of a reduction in all types of personal insolvency processes.
"We now have a year’s worth of pandemic insolvency figures, and it’s clear the Government’s support measures have prevented a significant number of businesses from becoming casualties of the economic consequences of Covid-19.
“The big question is what will happen to insolvency numbers as we come out of the pandemic, but there are too many variables to say with much certainty about exactly what this will look like.
“Government has a challenge on its hands in terms of managing the exit from lockdown and the withdrawal of its financial support measures. How it handles this will help to determine if there is a sharp spike of business failures or simply a smoother return to pre-pandemic insolvency levels.
“And company directors need to make the most of the time they have left before these support measures finish to plan for the future, and work out how they will manage without state support.
“The situation is still tough for many British businesses. While spending is increasing, it’s still below 2019 levels and consumer confidence remains low, although people are more optimistic about their finances over the next 12 months.
“The easing of the lockdown in the middle of April, and the further lessening of restrictions this week, will be a boost to many businesses. That said, a large number are still having to work in a way that complies with Covid guidelines, adding cost and complication to their operations.
“The temporary ban on winding-up petitions is due to finish at the end of June, and other Government support schemes are due to be withdrawn in the next few months, which will clearly increase pressure on financially struggling firms.
“On the personal insolvency side, although it’s been a torrid twelve months for many, we’ve yet to see that translate into an increase in the number of people entering a personal insolvency process.
“Government and the private sector have made a significant amount of support available, which has provided a vital safety net for many – although these measures haven’t been able to help everyone.
“We urge anyone who is worried about their finances to ask for advice from a qualified source – and to do it as soon as possible. It’s a hard step to take, but the sooner you do it, the more potential solutions you have open to you, and the more time you have to decide which of them is the most appropriate.”