The number of monthly corporate insolvencies has increased by over a third, and doubled since the same time last year, highlighting the enormous challenges faced by Midlands businesses as they struggle to overcome spiraling inflation and energy costs as well as the shockwaves of the pandemic.
Latest Government insolvency statistics for England and Wales show that corporate insolvencies increased by 39.4% in March 2022 to a total of 2,114 compared to the previous month’s figure of 1,517, and rose by 111.6% compared to March 2021’s figure of 999.
According to the Midlands branch of insolvency and restructuring trade body R3, the sharp increase in corporate insolvencies suggests that many directors have seen the current economic prospects as an obstacle they will not be able to overcome and have closed their companies ahead of time.
R3 Midlands chair Eddie Williams, a partner at PwC in the East Midlands, said: “The increase in corporate insolvencies in March was driven by a rise in Creditor Voluntary Liquidations, a procedure initiated by directors of insolvent firms to close their company. The numbers were almost 40% higher than the previous month.
“These figures reflect the tough business climate in the region. Directors have gone from trying to trade through a global pandemic to trading while the costs of fuel and energy rise significantly. At the same time, employees are concerned about whether their earnings can cover the increased costs of living. Both firms and individuals have barely had time to draw breath.
“As a result, business and consumer confidence is low – a situation which looks unlikely to change in the near future. R3 therefore urges any directors worried about their company’s finances to seek advice as soon as possible.
“Talking about money worries can be challenging, but the earlier it is done, the more potential options there are, and the more time there is to make a decision about the future. Many R3 members offer a free initial consultation to those looking for help with their business’s finances.”
