East Anglian insolvency expert’s warning as firms going bust dips amid crisis timelag
PUBLISHED: 00:28 27 July 2020
Surprise falls in the number of corporate insolvencies across England and Wales don’t yet reflect the coronavirus pandemic effect, an East Anglian insolvency trade body has warned.
R3 Eastern said latest government insolvency statistics published on July 14 show a drop in corporate insolvencies in June driven by a sharp fall in the number of Creditors’ Voluntary Liquidations and a drop in administrations.
The Insolvency Service figures show 732 company insolvencies in England and Wales in June 2020 – a fall compared to the previous month and a 50% drop compared to the number for June 2019.
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R3 Eastern chairman Alistair Bacon, of AMB Law, said the statistics still do not reflect the harm the pandemic is wielding on businesses because of the time lag between setting up and entering corporate insolvency processes, and due to the government’s safety net of business support measures.
“In reality, the economic contraction in April and May shows that consumer spending had halted, and consumer confidence was unsurprisingly low during both months, with no real improvement in June. Business owners are naturally worried about the health of the economy over the next year and, ultimately, about their own financial survival,” he said.
According to latest R3 research among members of the insolvency profession, there has been a significant rise in clients seeking support with managing reduced demand for their products and services. Firms are also asking for guidance around how they can manage working capital shortages in cashflow forecasts.
“The situation is still tough for many people, with little sign of economic improvement on the horizon. Anyone experiencing problems with their business or personal finances should seek advice from a qualified source as early as they possibly can,” said Mr Bacon.
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