Figures published by the Insolvency Service today reveal an increase of more than 60% in corporate insolvencies compared to this time last year.
Personal insolvencies have fallen by almost 20%, but as the number of people entering a Breathing Space remains relatively consistent, there are still many people who are seeking help to resolve their financial issues.
Corporate insolvencies fell by 3.0% in October to a total of 1,405 compared to September’s total of 1,449, and increased by 63.6% compared to October 2020's figure of 864.
Personal insolvencies fell by 3.0% to 9,668 in October 2021 compared to 9,966 in September 2021, and were 19.2% lower than October 2020's figure of 11,960.
Philip Winterborne, chair of insolvency and restructuring trade body R3 in Wales, responds to today's publication of the October 2021 corporate and individual insolvency statistics for England and Wales:
“The month-on-month fall in corporate insolvencies has been driven by a reduction in the number of Creditors’ Voluntary Liquidations. However, there are still twice as many companies entering this procedure than this time last year, and nearly 20% more than in 2019.
“This would suggest that significant numbers of company directors are facing the difficult decision to close their businesses after deeming post-pandemic survival in the medium to longer term unlikely.
“However, the fact that overall corporate insolvencies are 5% lower than the number in October 2019 suggests that the Government’s support measures have prevented the economic consequences of COVID from translating into higher levels of corporate insolvency.
“The business climate is still harsh. Economic growth is slowing, costs are rising, and consumer confidence is falling. And although consumer spending is higher than it was this time last year, rising COVID case numbers and sharp energy price rises have meant many businesses aren’t seeing the benefits of this.
“As we move closer to Christmas, we would urge company directors in Wales to be mindful of the signs of business distress, which include cashflow problems, such as difficulty paying invoices, staff or other business overheads, and seek advice at the first signs of trouble.”
Philip, who is a Partner at Temple Bright Solicitors in Bristol, continued:
“Looking at the personal insolvency figures, the month-on-month and year-on-year falls have been driven by a reduction in all types of procedure. The number of people entering a Breathing Space remains relatively consistent, which suggests there are still many people who are facing some level of financial difficulty, which is unsurprising given the impact of the pandemic.
“From a personal finance perspective, the situation continues to be tough for people. Personal debts have increased, consumer confidence is low, and people are worried about their finances and the future of the economy.
“These concerns have been heightened further by rising energy prices and increasing costs across the board, while the 1.1m people who were still being supported by the furlough scheme when it ended will have worried about the future of their jobs.
“Anyone in Wales who is concerned or anxious about their business or personal finances should seek advice as soon as possible. Early advice gives you more potential options and more time to make a decision about what’s best for you – and most insolvency professionals will give you an hour of their time for free to explain your situation and outline and discuss your potential options.”