R3 responds to June 2021 insolvency statistics

16 July 2021

• Corporate insolvencies increased by 19% to 1,207 in June 2021 compared to May’s figure of 1,014, and rose 62.9% compared to June 2020's figure of 741.
• Personal insolvencies rose by 15.8% to 9,836 in June 2021 compared to May’s figure of 8,497, and were 18.8% higher than June 2020's figure of 8,282.

Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3, responds to today's publication of the June 2021 corporate and individual insolvency statistics for England and Wales:

"The increase in corporate insolvencies between May and June – to the third highest monthly figure since the pandemic started – has been driven by a rise in Creditors’ Voluntary Liquidations (CVLs), while the rise in personal insolvencies can be attributed to an increase in Individual Voluntary Arrangements.

“The Government’s decision to delay lifting the final COVID restrictions for another month has clearly been a further blow to the business community and may have been particularly unhelpful for the hospitality and retail sectors, which have been hit hardest by trading restrictions and lockdowns.

“It may be that this impact has been reflected in today’s statistics as the rise in CVLs, used by directors to voluntarily close a company, suggests that for many directors the delay to the removal of the restrictions may have simply made it uneconomic to continue trading.

“However, we were heartened by the Business Secretary’s recent comments on HMRC’s planned approach to working with distressed businesses. In particular, the news that HMRC will take a supportive approach to rescue proposals from viable businesses is welcome, and we hope will support the profession’s efforts to support COVID-hit firms.

“When it comes to personal insolvency, the figures show the damaging effect of the pandemic on people’s personal finances and their financial health.

“While the pandemic has led to many people repaying their debts and boosting their savings, others have borrowed more, used their savings to cover a shortfall in income, or deferred paying certain debts. It’s these people who are financially vulnerable as things tentatively return to normal – and may be one unexpected shock away from running into trouble.

“Although unemployment has yet to return to its pre-COVID levels, the increase in job vacancies to numbers not seen since 2018 suggests that employment at least could be returning to a more positive place.

“Anyone who is concerned about their finances – either business or personal – should seek advice from a qualified source as soon as possible. Taking the initiative, rather than avoiding the issue, will mean you have more options open and more time to consider your next step.”