January insolvency statistics – UK’s largest accountancy firm for SMEs responds
Stephen Grant and Louise Brittain, restructuring and insolvency partners at Azets, the UK’s largest regional accountancy and business advisors to SMEs, comment on the January 2021 corporate and personal insolvency statistics for England and Wales.
Stephen Grant, restructuring and insolvency partner at Azets: “The number of corporate insolvencies remained low in January 2021 and were 50% lower than in January 2021. This is likely due to continuing government support for companies affected by Covid-19, temporary restrictions on the use of statutory demands and certain winding-up petitions and a large amount of creditor forbearance.
“However, this will not last forever. The UK’s economy is not any stronger and the full effects of Brexit are yet to be felt. There will be a backlog in the system of the winding up orders not made this year and we will have to prepare ourselves for when the brakes come off.
“In the short term, there is a sense of wartime spirit with the majority of creditors understanding why their debtors cannot pay. They seem to understand that one person’s spending is the next person’s income and if people’s spending is reduced then people’s incomes are reduced.
“Once the court restrictions are lifted it will also be interesting to see how landlords react. Will they enforce non-payment of historic arrears or will landlords be concerned that if they obtain possession of their premises they may not be able to release them and then be liable for business rates themselves? I suspect we will see a move to more turnover rents where the interests of the landlord and tenant are aligned.”