Company insolvencies remain at record lows but for how long?
Company insolvency statistics continue to defy gravity.
Insolvency figures released last week by the government’s Insolvency Service show a 23% drop in corporate insolvencies compared to April last year, and a 35% drop compared to April 2019.
Leading restructuring and insolvency professional, Peter Hart from PKF GM said “We expect this trend of low corporate insolvency numbers to continue into June and July while government support schemes remain available. However, the tide is likely to turn soon and it is inevitable that they will return to at least pre-pandemic levels in the future.
As lockdown measures start to ease and a number of businesses that have been closed for most of the last year start to reopen, we expect more businesses in the region will need to consider what future funding they will require if sales do not quickly return to pre-pandemic levels.
This period is definitely the calm before the storm. Insolvency levels will rise when that funding is no longer readily available through the government schemes and creditors are once again able to enforce their rights. With increased working capital requirement on re-opening, there will be multiple added pressures on businesses in the coming months, particularly those that weren’t in robust financial health before Covid.
It’s critical businesses act early and seek advice if they are struggling now, or think cash flow may be squeezed in coming months. The earlier they act, the more options they’ll have to continue trading and recover.”