Businesses are being urged to act early and seek advice if they are struggling financially.
This comes after the Insolvency Service reported a 63% increase in corporate insolvencies in June 2021 when compared to the same month in 2020.
Commenting on this news, insolvency practitioner PKF GM’s director Oliver Collinge, said: “This trend of rising corporate insolvency numbers has long been predicted and we expect it to continue as government support schemes reduce and the temporary restrictions on the use of certain reditor enforcement actions are lifted.
“It is inevitable that insolvency numbers will return at least to pre-pandemic levels relatively soon and possibly higher for a period of time. One of these temporary restrictions, namely the moratorium on issuing winding up petitions, is due to end on 30 September 2021 which, if not pushed back again, could trigger a sharp rise in corporate insolvencies in the coming months as creditors will be able to enforce their rights again.
“The end of the furlough scheme is also due at the end of September 2021, which will put further cash flow pressure on some companies in the region and will likely increase insolvencies in the last quarter of 2021 and the start of 2022.”
According to the Insolvency Service figures, there were 1,207 registered company insolvencies in June 2021 - of which 1,116 were through creditors’ voluntary liquidations. This figure is twice the amount recorded in June 2020 and 11% higher than June 2019.
In addition to this, there were 38 compulsory liquidations - which is 46% lower than in June 2020 and 86% lower than June 2019. Alongside this, there were 14 company voluntary arrangements - which is the same as 2020 but 60% lower than 2019.
Meanwhile, there were 39 administrations in June 2021, 61% lower than 2020 and 74% lower than 2019.
When it comes to corporate insolvencies, this figure is forecasted to increase over the next few months. This is why, according to Collinge, it’s “critical businesses act early and seek advice if they are struggling now, or thinking cash flow may be squeezed in coming months”.
He added: “The earlier they act, the more options they’ll have to continue trading and recover.”