A record number of business owners placed their company into voluntary liquidation in the third quarter of 2021, the latest statistics have revealed.
The report, published by the Insolvency Service, show that there were 3,765 corporate insolvencies during July, August, and September 2021 – 17 per cent more than in the second quarter of 2021 and 43 per cent more than in the same period last year.
In addition, one in every 341 active companies entered liquidation between 01 October 2020 and 30 September 2021.
The increase in insolvencies was driven mainly by an increase in the number of creditors’ voluntary liquidations (CVLs), which soared to their highest level since the second quarter of 2009.
A CVL is where the directors of a distressed company, with agreement of the shareholders, voluntarily elect to place the business into liquidation in order to pay its debts.
Commenting on the figures, Nicky Fisher, Deputy Vice President at insolvency and restructuring trade body R3, said:
“The rise in CVLs would suggest that company directors are choosing to close their businesses after trading for more than a year and half during a pandemic” she said.
“As we enter the winter months, directors need to be alert to signs their business might be distressed, which include cashflow issues, problems paying staff or suppliers and increasing stock levels – and seek advice as soon as any of them present themselves, or if they become worried about their business and its finances.”
To find out more about corporate insolvencies and for general commercial advice, including advice on start-ups, mergers, acquisitions, investment, and corporate finance, please get in touch with our Partner, Maung Aye, in the Corporate and Commercial Team on +44 (0) 20 7240 0521 or at firstname.lastname@example.org
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