In Focus Risk
A focus on the figures
Monthly corporate and individual insolvency statistics for November 2020 showed key trends as the year came to an end
Colin Haig President, R3
The increase in corporate insolvency numbers in November has been driven by a rise in Creditors Voluntary Liquidations (CVLs). However, Company Voluntary Arrangements (CVAs), Administrations and Compulsory Liquidations all fell compared to the previous month.
Comparison Numbers of all types of personal insolvencies fell in November compared with October, leading to an overall month-on-month drop of over a fifth. The fall compared with the same month
last year is less precipitous, however, with more IVAs registered last year than in November 2019. It is only a pronounced reduction in
bankruptcies and Debt Relief Orders which meant there were 3% fewer individual insolvencies in November 2020 when compared with a year ago.
Small increase Despite the small monthly increase in overall corporate insolvencies, the statistics published last month are not an accurate reflection of the state of the economy or the state of the UK business community. Businesses and individuals from Land’s
End to John O’Groats have been affected by COVID-19 and the only reason this has not shown up in the statistics yet is because of the extensive support government has provided. Without it, we would be in a very different situation – and a very grave one at that.
Economy The economy is still nearly 8% smaller than it was in February, unemployment has increased, and a number of big brands have entered insolvency processes or announced restructuring programmes in recent weeks. That said, the extension of the furlough scheme and the temporary ban on winding-
That said, the extension of the furlough scheme and the temporary ban on winding-up petitions until the end of March will provide some reassurance to many businesses and their staff as we go into the Christmas period and the first quarter of 2021
up petitions until the end of March will provide some reassurance to many businesses and their staff as we go into the Christmas period and the first quarter of 2021.
Effect However, the effect of the various restrictions and lockdowns across the UK remains to be seen, and questions remain about the government’s strategy for eventually winding down its packages of support and what will happen to those benefiting from these measures once they end. Against this backdrop, and with the clock
ticking, continued uncertainty around the UK’s future trading relationship with the EU is one issue that many already struggling firms could do without.
Festive period A good festive trading period has never been more important, but the impact of repeated stop-start closures in many sectors, and the disruption to usual pre-Christmas activities and events, mean that many firms will face a cold start to 2021. CCR
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www.CCRMagazine.com January 2021
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