Company insolvencies in Birmingham and the Midlands
According to the Office for National Statistics, between 2019 and 2021, most regions showed an increase in the numbers of registered businesses. The East Midlands had seen the largest increase, with a rise of 0.2%. The number of registered businesses in the West Midlands remained at similar levels to previous years.
With company insolvencies rapidly increasing, regions with the highest number of registered businesses, could also see the highest number of company insolvencies when the economy takes its toll.
In March 2022 the total number of company insolvencies was 2,114, more than double the number registered in the same month during the previous year (999 in March 2021), and 34% higher than the number registered prior to the pandemic (1,582 in March 2019).
Of these insolvencies, the vast majority were CVL’s which have been consistently increasing over recent months. Sadly, these numbers are widely expected to increase throughout 2022 as UK businesses face rising energy costs and inflation. So, what should directors be aware of?
What if my company cannot pay its debts?
A company director must always act in the best interests of the company. In insolvency, the interests of company creditors will be paramount, and a director must take steps to ensure assets are preserved, and the position to company creditors does not worsen.
If you do not take appropriate action, your company is likely to face enforcement action and could ultimately be forced into Compulsory Liquidation. Even if you believe that the problems are only temporary, you should make sure that you understand the options available and be satisfied that the decisions you make are the correct ones.
When to seek advice from an Insolvency Practitioner
By definition, a company is insolvent when:
- it can’t pay bills when they become due; and / or
- it has more liabilities than assets on its balance sheet.
If your company is insolvent, or perhaps you feel that it is struggling, it is important to seek early advice from a Licenced Insolvency Practitioner.
An Insolvency Practitioner is likely to be best placed to review the viability of your business and help you with a plan of action. It may be possible for the business to recover, but if this is not possible, you may need to take steps to close your company. In these circumstances, where company debts cannot be paid prior to closure, then liquidation may be the only course of action.
Can Insolvency Practitioners help?
Keywood Group is a Licenced Insolvency Practice with offices in Birmingham in London, and our team has extensive experience in advising business on their options (whether formal or informal) and dealing with company closure.
Our Insolvency Practitioner is fully licenced and regulated by The Insolvency Practitioners Association. Our insolvency team is based at our Birmingham office and will provide you with transparent advice in relation to all of the options available.
We strongly believe that directors should receive comprehensive advice on the implications of any decision made in relation to a limited company. If the decision to place your company into an insolvency process has personal implications, we will make this clear from the outset, so that you have complete clarity on the decisions you make.
If you want further information, please contact us for a no obligation chat.