A dramatic year-on-year increase in the number of corporate insolvencies is highlighting the enormous challenges faced by Midlands businesses as they continue to battle the economic shockwaves of the pandemic.
Latest Government insolvency statistics for England and Wales show that corporate insolvencies increased by 105% in January 2022 to a total of 1,560 compared to January 2021’s figure of 758.
According to the Midlands branch of insolvency and restructuring body R3, the doubling in corporate insolvencies suggests that creditors are now starting to take action over unpaid debt, having been legally prevented from doing so since the start of the pandemic.
R3 Midlands chair Eddie Williams, a partner at PwC in the East Midlands, said: “The substantial increase in company failures is being driven by a rise in compulsory liquidations, which are 131.4% higher than this time last year.
“Numbers of Creditors’ Voluntary Liquidations have remained similar compared to this time last month, which suggests that many company directors are continuing to choose to close their businesses rather than attempting to carry on trading in the current climate.
“These Insolvency Service figures indicate the toll the current climate is taking on local firms. Over the last two months, Midlands businesses have had to trade through a perfect storm of issues, including spiralling inflation and transport costs, new COVID measures and steep increases in energy prices.
“Against a backdrop of continued pandemic-related uncertainty, there is likely to be a significant number of directors who are doubtful that their business can survive much longer. In such cases, the sooner advice is sought from a qualified and reputable source, the more potential there is for a solution.
“Many R3 members offer a free consultation to those who are looking for help with their business’s finances and want to explore their options.”
