Prevalence of liquidations over administrations is worrying
Colin Haig, head of restructuring & insolvency at Azets, the UK’s largest regional accountancy firm and business advisor to SMEs, comments on the January 2022 company for England and Wales:
“The number of liquidations continues to rise this year and we’ve now seen the use of a CIGA 2020 Restructuring Plan and 15 moratoriums . 15 moratoriums is very good news and this procedure is potentially a game changer for the UK because it gives management air cover while they finesse a solution better than a train crash.
“However, the prevalence of liquidations rather than administrations is a worry. Liquidation usually means that there is no way forward for the business and employees and compulsory liquidation is a symptom of businesses chasing debt playing catch up with their credit control, knowing full well that everyone is likely to lose in a liquidation with no one getting paid. A going concern solution delivered via an administration is relatively better than liquidation as it will generally keep more people in jobs and potentially result in more debt being paid to creditors. We hope to see more moratoriums and less liquidations this month.”