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 corporate and personal insolvency statistics for June:
“The June statistics show both corporate and personal insolvencies fell compared to May’s figures. The decrease in the number of corporate insolvencies was driven by a sharp reduction in the number of Creditors’ Voluntary Liquidations and a drop in administrations. While personal insolvency numbers have also remained low, with bankruptcies showing a particular fall, the overall picture is much cloudier due to a number of issues that have affected the processing of Individual Voluntary Arrangement registrations.
“Today’s statistics still do not show the effects of the pandemic on personal and corporate insolvency levels. In part this is because of the time it takes to set up and enter corporate and personal insolvency processes, but also because of the Government’s support measures, which will have provided a valuable safety net for many people and businesses.
“However, the economic contraction in April and May shows that consumer spending had halted, and consumer confidence was unsurprisingly low during both months, with no real improvement in June. People are naturally worried about their finances and the health of the economy over the next year, and with many thousands of job losses recently announced and with more predicted to come, it is easy to see why.
“Our members are telling us that requests for formal insolvency support have not been significantly higher than before the pandemic. However, there has been a significant increase in existing and new clients asking for support with managing a reduction in demand for their products and services, and guidance around how they can manage working capital shortages in cashflow forecasts as the economy gets moving again.
“The situation is still tough for many people with little sign of economic improvement on the horizon. That’s why anyone who starts to see problems with their business or personal finances should seek advice from a qualified source as early as they possibly can.”