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R3's response to monthly corporate and individual insolvency statistics

16 April 2021
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Corporate insolvencies have increased significantly over the past month as economic damage caused by the pandemic appears to be starting to show, according to the R3 trade body for restructuring and insolvency professionals in the South and Thames Valley.

Garry Lee - chair of R3’s Southern and Thames Valley region.

The findings come a year after the first national lockdown was introduced at the end of March 2020.

New government figures for England and Wales show that:

  • Corporate insolvencies increased by 44.8% to 992 in March 2021 compared to February’s figure of 685, although this is still 19.7% lower than March 2020’s figure of 1,236.
  • Personal insolvencies in England and Wales increased by 60.2% to 10,941 in March 2021 compared to February’s figure of 6,828. This is 40% higher than March 2020’s figure of 7,815.

Garry Lee, chair of R3’s Southern and Thames Valley region, said: “It appears that the economic damage caused by the pandemic is starting to be reflected in levels of insolvency, but government support has postponed rather than prevented the true picture being shown in insolvency levels to date. 12 months ago, the economy was struck by the pandemic – and it has yet to fully recover.

“The monthly rise in corporate insolvencies comes after 11 months of relatively low levels of company insolvency procedures, as the Government’s support has provided many businesses with a vital lifeline and removed many of the traditional prompts and triggers for seeking financial advice.”

The monthly rise in corporate insolvency numbers has been driven by an increase in creditor voluntary liquidations and administrations, while company voluntary arrangements also increased.

On the personal insolvency side, all types of procedures increased in number compared with the previous month.

The year-on-year increase is down entirely to individual voluntary arrangements, with bankruptcies and debt relief orders still notably lower than this time last year.

Lee, who is an associate director in the recovery and restructuring services department at accountancy firm Smith & Williamson’s Southampton office, added: “As lockdown restrictions continue to unwind, there are reasons to be optimistic. Many businesses have adapted and reinvented themselves during the pandemic and may be in a better position for the coming months as a result.

“We may also see consumer spending increase, but companies need to be aware of the risks of over-trading if they don’t have the cash flow needed to cover the full costs of reopening and restocking. They need to plan for a sustainable reopening of their businesses.

“Unemployment is unsurprisingly higher than it was a year ago, and while many people have been able to save money during the pandemic, there is also a large number whose personal finances are precarious.

“The demand for workers in sectors gearing up for a return to pre-pandemic levels of work will offset some of the jobs lost in the companies worst-hit by covid, but it will take some time for unemployed people’s economic and mental wellbeing to recover.

“The Government’s recent decision to extend a number of its temporary insolvency measures provides a window for anyone whose finances have been affected by the pandemic to plan for the future and explore how they can improve their situation.

“We urge them to take it – and to start by seeking advice about their options from a qualified, regulated adviser.”


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