Bleak Forecast For Companies Waiting For The Economy To Turn Corner

Kerry Pearson, Partner & Insolvency Practitioner, North East, at accountancy and advisory firm Azets, comments on the latest insolvency statistics for England and Wales.

Kerry Pearson

Kerry Pearson said:
“February 2024 saw 2,102 corporate insolvencies, 17% higher than in February 2023 (1,801) and 38% higher than two years ago (1,518 in February 2022).

“There were 217 compulsory liquidations and 1,707 Creditors’ Voluntary Liquidations (CVLs), both higher than in February 2019, as creditor pressure remains above pre-pandemic levels.

“Compulsory liquidations are holding at record high levels, and we may see a further increase as creditors continue to lose patience and seek to improve their own working capital through proactive pursuit of debt.

“Administrations have increased 54% compared with February 2023, which points towards a positive appetite for restructuring and acquisitions. Administrations are typically used as a rescue tool whereby assets are renewed, jobs are saved and increased value is achieved for stakeholders.

“Despite the UK economy returning to growth this week, the 0.2% increase won’t offset the absence of a post-Christmas boost many business owners were hoping for.

“For consumers, the cost-of-living crisis continues to reduce discretionary spend, while business overheads remain high and margins low.

“The forecast remains bleak for companies waiting for the economy to turn a corner. We predict another difficult year ahead for, with business owners forced to make tough decisions. Taking early advice is critical to protecting as much of the business as possible, ensuring a trading entity can emerge and avoiding the total loss of jobs.”

Last year there were 25,158 registered company insolvencies, the highest annual number since 1993.

Azets has regional offices in Alnwick, Crook, Durham, Hexham, Newcastle, Morpeth, Seaton Burn and Wynyard.