Cashflow pressures driving rising insolvencies
Nicola Banham, restructuring director, at Azets, the UK’s largest regional accountancy firm and business advisor to SMEs, comment on the October 2021 company and individual insolvency statistics for England and Wales:
“Corporate insolvencies in October 2021 (1,405) were just 5% lower than pre-pandemic levels in October 2019 (1,480). Whilst corporate insolvencies were relatively static this month, we expect corporate insolvencies to increase as companies continue to experience cashflow pressure due to the surging cost of staffing, energy prices, and raw materials, due to ongoing supply chain challenges.
“There was a small increase in the number of compulsory liquidations in October, following the end of the restrictions on winding-up petitions which were lifted on 1 October. It is once again possible to present a winding-up petition where a company has failed to satisfy a statutory demand, and it is no longer necessary to consider the financial effect of Covid-19 on the company. There is a 21 day consultation period prior to submitting a petition so we expect to see an increase in compulsory liquidations next month.
“The number of administrations continues to creep up, which could offer insight into the health of UK mid corporates. Administration has hopefully been selected as an alternative to liquidation as it has been possible to rescue the business.”