Christina Fitzgerald of R3
The Insolvency trade group R3 responds to May’s latest figures from Companies House as firms struggle to pay off Covid loans
By Harry Mottram: The insolvency and restructuring trade body R3’s president Christina Fitzgerald said Creditors’ Voluntary Liquidations had affected corporate insolvencies following the publication of the latest figures for May from Companies House.
The Government body charged with recording insolvencies reported that corporate insolvencies decreased by 8.9% in May 2022 to a total of 1,817 compared to April's total of 1,995, and increased by 79.2% compared to May 2021's figure of 1,014.
R3 reported: “Personal insolvencies increased by 11.2% to 10,476 in May 2022 compared to 9,417 in April and increased by 23.3% compared to May 2021's figure of 8,496.”
Christina Fitzgerald, of R3 said: “The monthly fall in corporate insolvencies has mainly been driven by a reduction in Creditors’ Voluntary Liquidations. However, numbers for this process and for overall corporate insolvencies are higher than this time last year, the year before it (2020) and in 2019. This suggests that while the current economic challenges are continuing to hit businesses hard and are pushing an increased number into insolvency, insolvency trends are still uneven.
“In recent months, firms have been buffeted by rising costs, falling consumer confidence and reluctance to spend on anything other than the essentials, which has meant they haven’t made the additional income they need to offset increased expenditure. There simply hasn’t been time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle – and rising interest rates will add extra costs for firms to deal with.”
“Most R3 members will give an hour’s free consultation to potential new clients to allow them to understand more about the business or individual’s circumstances, and to outline the options open to them to improve their situation.”
ICSM’s Ian Carrotte said the economy was entering a very difficult period with rising inflation and interest rate hikes. He said: “Anecdotally we are hearing about a lot firms struggling to pay back Covid loans so it is no surprise the figures for company failures are on the up. ICSM has called consistently for help for business with a suggested cut in VAT, reform of business rates and pegging of energy prices. Our advice is for firms to maintain cash flow at all costs and not to allow debts to increase. Pay off debts as a matter of urgency and cut cost if possible.”
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