Latest statistics show that corporate insolvencies are increasing

According to the latest statistics company insolvencies are increasing.  The latest figures show that the number of registered company insolvencies in October 2021 was 1,405, compared to 864 in the same month last year (October 2020).  Despite this increase of 63% year on year, the numbers were still marginally lower than the numbers recorded pre-pandemic (1,480 in October 2019).    

These statistics are hardly surprising, given the withdrawal of various support measures which were introduced at the start of the Covid-19 pandemic. 

It also appears that the increase has been driven by a higher number of CVL’s, whereas other corporate insolvencies, such as administrations, company voluntary arrangements (CVA’s), and compulsory liquidations, which remained notably lower than in previous years.

Sadly, these numbers are widely expected to increase further as we enter into 2022 and the fallout from Covid-19 continues – 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 and take action

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, 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.  As a team headquartered in Birmingham we will work to assess the options available and provide transparent advice in relation to each one.

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. 

We have offices in Birmingham and London, so feel free to contact us today for a no obligation chat about options available.