11 November 2021
R&I Update – November 2021 – 2 of 5 Insights
On 29 October 2021, the UK Insolvency Service published its insolvency statistics for Q3 2021. Notably, the number of company insolvencies was 17% higher than in Q2 2021 and 43% higher than in Q3 2020. This was driven by an increase in company voluntary liquidations (CVLs) to the highest quarterly level for 12 years.
While CVL numbers were higher in Q3 2021 than pre-pandemic levels, numbers for other insolvency procedures – such as compulsory liquidations and administrations – remained at historic lows. This was due in part to the unprecedented government fiscal measures put in place to support businesses and the temporary restrictions on the use of statutory demands and winding-up petitions.
The recent UK Budget announcement included some continued financial support for certain businesses, including a business rates discount for the hospitality, retail and leisure sectors for 2022-2023. From 30 September 2021, however, most government measures have either ended or been replaced by tapering measures and statutory demands and winding up petitions can now be presented (subject to certain restrictions to support small business and commercial tenants).
As businesses face these changes and other pressures – including record highs in energy costs, supply chain issues, staff shortages and the repayment of COVID loans – it's likely that we will see company insolvencies continue to rise in the UK in the months ahead.
To discuss these issues further please reach out to a member of our Restructuring & Insolvency team.