Insolvencies on the Increase

The UK has seen the highest number of corporate insolvencies in 18 months, driven by a rise in Creditors’ Voluntary Liquidations (CVLs), which is an increase back to pre-covid levals.

• There were 3,116 seasonally adjusted corporate insolvencies in Q2 2021, an increase of 31.4% compared to Q1 2021's figures of 2,371, and a rise of 4% compared to Q2 2020 (2,997).

• There were 27,622 seasonally adjusted individual insolvencies in Q2 2021, a fall of 4.3% compared to Q1 2021's figures of 28,895, and a fall of 13.9% compared to Q2 2020 (32,134).

Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets, said:

“It’s hard to say what’s driving this increase in CVLs, but it could be that directors of a number of companies have decided they can no longer go on trading as a result of the pandemic, and are opting to close down their businesses by using the CVL process, before the situation deteriorates further.

“What is clear is that the figures published today show the toll the challenges of the last three months – and the twelve before them – have taken on the business community.

“While many business owners were hoping the lifting of the lockdown would help them, they reopened amid low consumer confidence, a time when people were being encouraged to stay local, and when the economy was still a long way from recovering from the blow the start of the pandemic dealt it. The formal end of lockdown may have improved their situation, but it wasn’t the boost many businesses had hoped for.”