Take Insolvency Advice Early to Help Cope With Financial Difficulties
As the Brexit process inches to its final denouement, whatever that might turn out to be, there is no doubt that the uncertainty it has created in the business world has already had its effect. Anecdotally, our team of insolvency practitioners in London (as well as in our other offices) has been giving out more company insolvency advice to businesses who are being proactive and planning to meet the challenges ahead. Statistically, figures from the Government show that in 2018, corporate insolvencies in England and Wales rose to their highest level since 2014.
It isn’t just the Brexit effect, of course. It’s more complex than that, with global indicators such as the slow down in the rate of China’s GDP growth and concerns about world trade playing their part. Closer to home, the relentless move to on line purchasing has seen many high street retailers suffer, whilst the significant shift away from diesel engines has caught out several car manufacturers, including JLR. Difficult times ahead? Certainly. As bad as 2010? Maybe not – only time will tell. In this article we take a look at some of the data and conclude that if your business is in difficulties, the sooner you take insolvency advice the better.
Government Statistics – Insolvencies are Up
The headlines from the latest Government Insolvency Statistics for England and Wales are:
- For Companies. In 2018, the underlying number of company insolvencies in England and Wales was 16,090, the highest level since 2014, when the figure was 16,293. It is worth noting that at the height of the last recession in 2009, the figure was nearly 25,000. In addition, all types of company insolvency increased in 2018 – including CVAs and Administrations – except administrative receiverships.
- For Individuals. There were 115,299 personal insolvencies in 2018, the third year of increases and the highest number since 2011. For comparison the figure for 2009 approached 135,000. The key driver for 2018 was the increase in Individual Voluntary Arrangements (IVAs), which hit their highest annual total on record.
- Looking at Q4 2018. The above figures are for 2018 as a whole. When looking at Quarter 4 2018, we see that individual insolvencies increased to their highest level since Q2 2010, again driven by IVAs. Interestingly, for companies, the underlying number of insolvencies fell compared to the previous quarter. This fall was after stripping out a bulk insolvency event caused by an increase in CVLs.
So much for the statistics. It will be interesting to see the Q1 figures for 2019 when they come out. All we can really say is that insolvencies are on the increase. We don’t know how bad it will get, but if your company is facing financial difficulties, now is the time to act and seek some company insolvency advice. Here at Antony Batty and Co, the first consultation is FREE.
How is Business Being Affected?
As is often the case, there is conflicting data.
- On the positive side, for example, the raw data shows that employment amongst 16-64 year olds is at a record high (though this does not comment on the type and quality of employment).
- In the grey area would be the analysis that the City of London will lose jobs as a result of Brexit, but perhaps a lot fewer than predicted (9,000 according to the London Mayor’s Office as at 29th March 2019, compared to earlier estimates of up to 65,000).
- More worrying, of course, is that business investment has been sluggish since the financial crisis and remains so as companies await the Brexit outcome. Wage growth has also been slow.
Stuart Frith, president of insolvency and restructuring trade body R3, recently commented:
“The pressure point for businesses most frequently cited by our members is weak consumer demand. People just don’t have much spare cash at the moment, reflected in the rise in the number of personal insolvencies.
This also spells bad news for businesses at one remove from the consumer, such as manufacturers supplying consumer products, shop fitters, or logistics firms. Every business is part of a network and one struggling business will affect others.”
On Brexit uncertainty and the future EU-UK trading relationship, he said that this is “already forcing businesses to hold off on investment decisions, again affecting their suppliers and customer networks. It has also prompted some companies to stockpile, putting a squeeze on cash flow and reserves.”
Our Role as Insolvency Practitioners
Our role is not only to supervise the process of liquidation, it is also to help try and keep struggling business open and trading in some shape or form, through the insolvency procedures of Administrations and Company Voluntary Arrangements. In addition, we give company insolvency advice to businesses struggling financially to help them avoid insolvency and turn their fortunes around.
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Contact us for Company Insolvency Advice
Our team of insolvency practitioners in London and at our other offices, is highly experienced in helping distressed businesses to turn their fortunes around. Take a look at some of our testimonials. This could include help and advice on:
- Improving cash flow
- Negotiating with creditors, including HMRC
- Dealing effectively with debtors
- Alternative sources of finance
If your business is facing difficult times ahead, seek advice and take action sooner rather than later. We are specialists in giving company insolvency advice and the first meeting is FREE. Please contact us or call us on 0208 088 0633 for an initial discussion.
