Creditsafe has reported that June saw a total of 1,079 companies become insolvent, the lowest monthly figure in the last three years. This number shows a 7% decrease compared to May and a 44% decrease compared to June 2019.
This significant reduction in the overall number of insolvencies 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, we have also seen that the number of court cases has been drastically reduced, with non-essential court hearings being postponed until later this year.
The total number of UK company insolvencies for the year rose to 9,998 by the end of June 2020. This represents an 11% decrease when compared to the same period (January – June) 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.
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