Corporate insolvencies at third highest since start of pandemic

R3 South West chair Philip Winterborne

R3 South West chair Philip Winterborne - Credit: R3

Corporate insolvencies have hit their third highest monthly total since the start of the pandemic, according to the R3 insolvency and restructuring trade body for Devon.

R3 South West chair Philip Winterborne, said that the delay in the lifting of restrictions may have contributed to the rise and he urged businesses and individuals with financial concerns to seek support earlier rather than later.

Mr Winterborne, added: “The increase in corporate insolvencies between May and June – to the third highest monthly figure since the pandemic started – has been driven by a rise in Creditors’ Voluntary Liquidations (CVLs).

“The Government’s decision to delay lifting the final Covid restrictions for another month has clearly been a further blow to the business community and may have been particularly unhelpful for the hospitality and retail sectors, which have been hit hardest by trading restrictions and lockdowns.

“It may be that this impact has been reflected in the statistics as the rise in CVLs, used by directors to voluntarily close a company, suggests that for many directors the delay to the removal of the restrictions may have simply made it uneconomic to continue trading.”

Devon is included in R3’s South West region.

The highest number of corporate insolvencies in any month since the start of the lockdown was 1,237 in December 2020. The next highest was 1,235 in March 2020.

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The rise in personal insolvencies in June 2021, can be attributed to an increase in Individual Voluntary Arrangements.

Mr Winterborne said: “While the pandemic has led to many people repaying their debts and boosting their savings, others have borrowed more, used their savings to cover a shortfall in income, or deferred paying certain debts.

“It’s these people who are financially vulnerable as things tentatively return to normal – and may be one unexpected shock away from running into trouble.

“Anyone who is concerned about their finances – either business or personal – in Devon should seek advice from a qualified and regulated source as soon as possible.

“Taking the initiative, rather than avoiding the issue, will mean you have more options open and more time to consider your next step.”

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