The Analysis Editor’s Letter
Insolvency reforms: CCRi:V to tackle the issues
Stephen Kiely Editor, CCRMagazine
stephen@ccrmagazine.co.uk
As we discussed, last month at
CCRInteractive: Virtual, it seems certain that the UK’s credit and collections industry will face a wave of debt at the end of this year and the start of next, the likes of which none of us have seen before. As such it was interesting to hear the
thoughts of the insolvency profession on the news that government has decided to extend its ban on the use of statutory demands and winding-up petitions, which it introduced at the end of April. Colin Haig, president of insolvency and
restructuring trade body R3, said: “The chancellor's decision to temporarily extend his COVID insolvency measures, coupled with the other aspects of the support package announced today, will be welcome news to many businesses across the country. “The pandemic has hit British businesses
“We would welcome HMRC adopting
a constructive approach to sensible, well- structured restructuring proposals. They are an important stakeholder in insolvency and restructuring procedures and their support at this time is and will be very significant.” Meanwhile, corporate insolvencies fell to
778 in August 2020 compared to the previous month’s figure of 961 and are significantly lower than they were in August 2019 (1,369). Personal insolvencies fell to 6,359 in total
compared to last month's figure of 7,330 and are significantly lower than August 2019’s figure (8,892). Mr Haig added: “The decrease in
in a way that no-one could have imagined or planned for. These temporary insolvency measures, combined with the furlough scheme and the package of emergency business loans, have played an important role in preventing pressure from translating into increased corporate insolvency levels of the size and scale we would expect to see in this type of economic climate. “The insolvency and restructuring profession will also welcome
the extension of the temporary relaxation of entry requirements for the new moratorium procedure. This measure could enable more businesses to access this important tool over the coming months, and help to facilitate the rescue of otherwise-viable businesses. “However, while the chancellor's announcement will make a real
difference in the coming months, these measures cannot be prolonged indefinitely, and the government will face a number of questions when this extension ends. “What will the government’s approach be to the mounting level of
corporate debt in the economy? What further flexibility will HMRC provide to COVID-hit firms which need extra time to pay their debts? “The government needs to make the most of the time it has bought
for business, industry and the economy with today's announcement to consider how it will answer these questions.
October 2020
requirements for the new moratorium procedure
of
restructuring profession will also welcome the extension of the temporary relaxation
The insolvency and entry
corporate insolvencies over August was driven by a drop in administrations and compulsory liquidations, while the fall in personal insolvencies is driven by a reduction across each of the three main personal insolvency processes (bankruptcies, Debt Relief Orders and Individual Voluntary Arrangements). “Despite today's news, there is no
question that the pandemic is taking its toll on businesses and individuals, but this impact is not being reflected in the insolvency figures, yet. With a number of temporary government measures aimed at reducing insolvency numbers set to come to an end on
30 September, this situation may start to change before long. “Government's support measures have provided vital protection
for businesses and consumers, but as they begin to wind down and this crucial safety net disappears, we expect to see more requests for personal and corporate insolvency advice and support. This is a worrying time for the UK, its economy and its business community.” Worrying indeed, and, at this time, the industry will need to
remain informed as we look to the future. As such the next CCRInteractive: Virtual, on Thursday 22 October, will consider look into what has been changed by Covid19 in how we collect debt. It looks set to be another informative session, and I hope that you will want to register to attend at
www.ccrivirtual.com. To find out more about being part of this important event, please
contact
gary@ccrmagazine.co.uk. Enjoy the magazine!
www.CCRMagazine.com 3
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