Fri, 30 Jul 2021 | BUSINESS NEWS
According to figures from The Insolvency Service, company insolvencies in England and Wales increased 31 per cent in Q2 2021. Insolvencies for the second quarter were comprised of 90 per cent CVLs, 5 per cent administrations, 3 per cent liquidations and 1 per cent company voluntary arrangements (CVAs).
The news comes amid growing concerns about the debts that businesses have accrued from government loan schemes during the pandemic, with the first repayments for the Bounce Back scheme and Coronavirus Business Interruption Loan Scheme (CBILS) now due.
The Q2 FY2021 figure of 3,116 was up 4 per cent on the same period a year earlier. Last week, it was announced that company insolvencies had increased 63 per cent in June 2021 compared to the same month last year. The June 2021 figure of 1,207 was also a 19 per cent increase on the previous month.
In the year ending June 30 2021, the sector which saw the highest number of insolvencies was construction, with 1,801. This was followed by accommodation and food services, with 1,474 and wholesale and retail trade with 1,366 insolvencies.
The announcement of rising insolvency rates has coincided with a Begbies Traynor report indicating that there are currently 650,000 UK companies in serious financial distress. The insolvency specialist said that, despite the ending of restrictions, businesses had struggled with regular changes to the roadmap out of lockdown.
The Begbies Traynor report found an increase in companies with unsustainable debt levels as a result of receiving government-backed loans that they are unable to pay. It also noted increased creditor activity against companies in debt, with 14,460 county court judgements in the second quarter of the year – nearly double the figure for the same period in 2020.
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