The month of August saw a total of 1,480 companies become insolvent, a decrease of 4% on last month and 13% lower than August 2019.
This significant reduction in the overall number of insolvencies year-to-date undoubtedly reflects the particular circumstances resulting from the Covid-19 pandemic, and resulting lockdown. Many distressed businesses are managing to keep afloat by making use of the high level of government support available, and many may well have opted to file for an extension with Companies House. However, as government schemes begin to come to an end and cash reserves become scarce many businesses may struggle to stay afloat.
The total number of UK company insolvencies for the year rose to 13,026 by the end of August 2020. This represents a 13% decrease when compared to the same period (January – August) in 2019. Given that the trend for the period of January to March saw an increase of 13% we can expect the numbers to rise again once the economy restarts. Businesses may well not recover from the current slowdown and the administrative backlog in the courts and public administration will work through with a resulting rise in insolvencies.