Most readers are probably smirking as they finish the quote in the heading. However, talking statistics, The Insolvency Service has released the latest statistics relating to registered company insolvencies in December 2021. Commentary – Monthly Insolvency Statistics December 2021 – GOV.UK (www.gov.uk)
In total there were 1,486 companies that registered as insolvent during December. Of these 1,365 were voluntary liquidations, which is 73% higher than December 2019. What is probably more concerning is that the principal rescue procedures of administration and company voluntary arrangement only numbered 79 companies, being 49% and 67% down respectively on December 2019 figures.
The remaining 42 companies all fell into compulsory liquidation, which is a 75% fall in numbers as compared to December 2019. However, this is understandable as a moratorium over most winding up petitions was introduced by the Corporate Insolvency & Governance Act (“CIGA”) and, new tapering measures were introduced from 30 September 2021 when the moratorium was to be lifted. This will continue to have a direct impact on post CIGA moratorium winding up petitions for the interim.
To add to the above numbers, two new procedures were introduced that were designed to assist safeguarding businesses. However, in the 6-months ended 31 December 2021 the company moratorium numbered just 15 while the restructuring plan only 10 of which two concerned parts of the Virgin Group of Companies.
No doubt there will be plenty of analysts who will draw their own conclusions as to why there seems a disproportionate number of liquidations as opposed to rescue procedures. At PBC we have considered this and summarise our opinion of the key reasons as:
- There is not a viable core business to save.
- The secondary preferential status, now enjoyed by HMRC, acts as a block to any opportunity of a return to the general body of creditors.
- Creditor frustrations are at such a level they will not entertain proposals for restructuring/saving the business.
- The procedural costs are sometimes prohibitive when compared to the company liabilities.
- Due to various legal and technical reasons, it is more constructive to look at a “Phoenix” and start afresh,
Much of the cause for the above issues also stems from that long-running problem of directors not taking early advice. At PBC we fully understand it is a very difficult step to take in calling our offices and seeking help, but it cannot be a coincidence that those early callers generally find they have more options available to them and invariably matters can be addressed in a more orderly & positive manner.
Should you have an insolvency-related issue then please contact a member of the team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to email@example.com or access our website at www.pbcbusinessrecovery.co.uk