Businesses urged to seek advice as year-on-year insolvencies increase

The Midlands branch of insolvency and restructuring trade body R3 has called on company directors to seek advice at the first sign their business is in trouble, as new Government statistics reveal more companies entering an insolvency process now than at this time last year.

The advice comes on the back of data published this week by the Insolvency Service which show that corporate insolvencies in England and Wales increased by 13.4 per cent to 1,094 in July 2021 compared to July 2020 's figure of 741.

R3 Midlands chair Eddie Williams (pictured), a partner at PwC in Birmingham, said: “This is the third consecutive month in which year-on-year corporate insolvency levels have risen, reflecting the effect the pandemic has had on our local business community.

“The 70.4 per cent increase in Creditors' Voluntary Liquidations this month compared to July 2020 suggests an increasing number of directors have decided to close their businesses after spending over a year trying to survive the pandemic.

“Although Government support has continued to provide financial lifelines for many businesses, July was still a challenging month.

“The delay in lifting the final restrictions will have hit trading, footfall and spending, and a huge number of firms have spent 15 months combatting conditions which are wildly different to normal. ”

R3 believes, however, that with the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than in 2019, the future does look more optimistic, but it will take longer for the worse-hit sectors to recover from the pandemic.

Eddie Williams continued: “SMEs are the backbone of the UK economy, but so many have been badly affected.

“The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.

“There is no shame in management asking for support or advice, and R3 members are ideally placed to provide it.

“Many of them will give an hour 's free consultation to firms that want to know more about their restructuring or insolvency options, so they can understand the situation the business is in and explain the potential solutions for improving it. ”