The number of business insolvencies has exceeded pre-pandemic levels for the first time since before the first lockdown, according to new figures from the Insolvency Service.
The stats show there were 1,674 business insolvencies in November – 88% higher than the same month in 2020 and 11% higher than in November 2019. As reported in October, insolvencies had jumped 71% year on year in August.
The rise has been driven by an increase in Creditors’ Voluntary Liquidations (CVLs), a procedure where company directors close their business voluntarily, and which now stand at the highest levels in more than two-and-a-half years.
Nicola Clark, R&I partner at accountancy firm Azets, said: “Corporate insolvencies are up by 88% compared with November last year, which is unsurprising given all the Government support initiatives that were in place at that time.
“However, for the first time since the pandemic began, the number of companies entering a formal insolvency procedure is higher than the same month pre-pandemic, with an increase of 11% compared with November 2019.”
End of Covid support puts firms under increasing pressure
She added: “Businesses have had to start making payments in relation to their BBLS and CBILS, which, together with the end of furlough and the amendment to the restrictions in relation to the presentation of winding up petitions, has put them under increasing financial pressure.
“This, coupled with the uncertainty surrounding what restrictions the Government may reintroduce in the run up to Christmas owing to the new variant, has given many directors pause for thought. This can be seen in the increase in the number of CVLs in November, which account for 90% of the corporate insolvency appointments.
“The relaxing of restrictions in relation to presenting winding up petitions hasn’t yet filtered through to the numbers, with only 50 compulsory liquidations in November – but as we move into the New Year, I expect these to quickly return to pre-pandemic levels.”