The month of March saw the total number of insolvencies rise for the third month in a row. A total of 1,562 companies become insolvent, an increase of 13% compared to last month (February) but still a 34% decrease compared to March 2020.
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 2020 rose to 19,654. This represents a 13% decrease when compared to the same period in 2019. Given that the trend for the period of January to March 2019 saw an increase of 13% we can expect the numbers to rise again once restrictions are eased and 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.