Credit Strategy – Turnaround, Restructuring and Insolvency News (IRR)

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This figure was 88% higher than the number of 891 recorded in November 2020 and 11% higher than the 1,509 figure recorded in November 2019. This is the first time since the Covid-19 pandemic that the number of insolvencies has ‘registered businesses were higher than before. pandemic levels.

In addition to this, there were 1,521 voluntary liquidations of creditors (LCLs) in November 2021, which is 43% more than in November 2019. Other types of business insolvencies, such as forced liquidations, have remained lower than they were before the pandemic.

Commenting on the numbers, R3 Insolvency and Restructuring vice president Christina Fitzgerald said: “The growing use of this process suggests that an increasing number of business leaders are choosing to shut down their le current climate.

“Times are tough for businesses in England and Wales as the pandemic continues to wreak havoc on the economy and the businesses that drive it. In recent weeks, businesses have been hit by the triple whammy of rising costs, supply chain issues and rising Covid cases.

“They have also worked in the face of low consumer confidence and anemic economic growth in recent months, which, together with an increasingly difficult Covid situation, has resulted in changes in purchasing and consumption habits. people and has had a negative impact on income levels.

“It remains to be seen how the introduction of Plan B will affect the economy in the short to medium term, but we know it will affect footfall, spending and operations at a time when many businesses would have hoped for a Christmas season. charged to help after a difficult year.

“We urge any director concerned about their business to seek advice as soon as possible. Researching it at an early stage offers more options, more time, and potentially better results for businesses than if it is delayed – and most insolvency practitioners will give potential new clients an hour of free consultation to help them. find out more about the situation they find themselves in and describe their potential options. to improve it.

As for individuals, 630 bankruptcies were registered, i.e. 33% less than in November 2020 and 54% less than in November 2019.

During that time, there were 2,054 Debt Relief Orders (DROs), 44% more than in November 2020. Part of the reason for this is the changes to the eligibility criteria on June 29. 2021, including an increase in the level of debt people can apply to. for a DRO of £ 20,000 to £ 30,000, making the number of DROs higher in July and November 2021 than in the previous months since the start of the Covid-19 pandemic.

At the same time, there were – on average – 7,002 Individual Voluntary Agreements (IVAs) per month during the three-month period ending in November 2021, which is similar to the three-month periods ending in November 2020 and November. 2019.

As for the Breathing Space device, between its launch on May 4, 2021 and November 30, 2021, there were 36,931 registrations. This included 36,411 Breathing Space registrations and 520 Mental Health Breathing Space registrations.

During the Covid-19 pandemic, the overall number of business and individual insolvencies remained low compared to pre-pandemic levels. And, while the number of CVLs is now higher than pre-pandemic levels, the number of other insolvency proceedings has remained lower.

This is likely due in part to government measures put in place to support businesses and individuals during the pandemic, such as temporary restrictions on the use of legal claims and some liquidation petitions and increased financial support from the government.

As of September 30, 2021, some of these temporary measures have ended or have been replaced by new reduction measures. However, according to the Insolvency Department, it is not possible to indicate the direct effect of changes to temporary measures on insolvency volumes.

Responding to the latest insolvency statistics, Claire Burden, Partner of the Tilney Smith & Williamson Professional Services Group Advisory Team, believes we are entering a new phase of ‘living with Covid’ where it is not clear whether the government will supply companies that are currently facing declining customer demand following an increase in Omicron cases of any support.

She added, “We hear a lot about hospitality and entertainment businesses facing massive cancellations as customers choose to stay home during the busiest time of year, when money is being generated. to negotiate during the quieter spring months. While relief from reduced VAT rates and trade rates will continue through March 2022, we expect insolvencies in the sector to increase if no further government assistance is forthcoming.

“But the problems are not limited to hospitality and entertainment. Companies must now repay their government-backed Covid loans and HMRC arrears while dealing with the problems of this Omicron wave.

“Organizations that depend heavily on people also find it difficult to function normally given the high levels of staff absences and self-isolation. Office districts are quiet again, with working from home impacting sandwich shops and other office support businesses.

“Additionally, outside of Covid, businesses are still grappling with inflationary cost hikes, interest rate hikes and international supply chain issues. We recommend that companies assume that no government assistance is on the horizon (certainly not at the levels seen previously) and strive to anticipate problems as quickly as possible.

“Businesses facing a bleak start to the year should plan for the unexpected, prioritize cash flow management, and talk to stakeholders to manage expectations and raise additional funds as needed. Directors should be aware of their responsibilities for illicit transactions and seek advice if they are affected. ”


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