Eleanor Temple, chair of insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to today's publication of the November 2021 corporate and individual insolvency statistics for England and Wales:
“The monthly increase in corporate insolvencies has been driven by a rise in Creditor Voluntary Liquidations (CVLs) to the highest number in more than two and a half years.
“The increase in the use of this process suggests that a rising number of company directors are choosing to close their businesses, perhaps because they feel that survival is impossible in the current climate.
“Times are tough for businesses in England and Wales as the pandemic continues to take its toll on the economy and the firms that drive it. Over the last few weeks, businesses have been hit by the triple whammy of increased costs, supply chain issues and rising COVID cases.
“They have also been operating in the face of low consumer confidence and anaemic economic growth in recent months, which, coupled with an increasingly difficult COVID situation, has led to changes in people’s shopping and spending habits and taken its toll on revenue levels.
“It remains to be seen how the introduction of Plan B will affect the economy in the short and medium term, but we know it will affect footfall, spending and operations at a time when many businesses would have been hoping for a busy Christmas period to help after a challenging year.
“We urge any director who is worried about their business to seek advice as soon as possible. Seeking it at an early stage provides more options, more time and potentially better outcomes for businesses than if it’s delayed – and most insolvency practitioners will give an hour’s free consultation to potential new clients to learn about the situation they are in and outline their potential options for improving it.
“Turning to the personal insolvency figures, the monthly fall has been driven by a reduction in Individual Voluntary Arrangements.
“It’s also worth noting that Debt Relief Order numbers increased slightly month-on-month, and that can be attributed to the widening of the eligibility criteria for this procedure introduced at the end of June. This has led to a greater number of people seeking help with their financial difficulties via this procedure.
“Despite today’s news, times are still tough for many people in England and Wales. Households are facing increases in energy bills, the cost of living has increased, and only yesterday the Bank of England increased interest rates in response to rising inflation.
“We know large numbers of people are having issues paying their rent and bills as a result of the pandemic, and we have yet to see the full effect of the ending of the furlough scheme, which has been a vital safety net for many, on people’s incomes and job security.
“Anyone worried about their personal finances should seek advice from a qualified source as soon as possible. The sooner you seek advice, the more options you have to resolve your situation, and the more time you have to take a decision about which is best for you.”
