Company Insolvencies on the Rise in 2021?
ACCOUNTANTS IN MANCHESTER
Accountancy Today has reported that company insolvencies rose by 63% in June 2021.
The figure represents an 18% drop compared to June 2019 (2020 data removed due to unprecedented trading conditions), it marks a spike in insolvencies from May 2021 where there were 2,011 business closures.
Scotland also saw a rise to 77 company insolvencies across June, a jump of 67% year-on-year and 13% when compared to the same period in 2019.
As for Northern Ireland, which also operates a “separate, but broadly similar” legislation to England and Wales, company insolvencies climbed 22% year-on-year to 11.
The insolvencies show a 51% and 57% month-on-month increase for Scotland and Wales respectively.
Individual insolvencies across England and Wales followed a different pattern, falling 21% and 17% year-on-year to 1,410 DROs and 735 bankruptcies respectively.
What is a Company Insolvency?
A Company Insolvency is when a business cannot meet it's debt payments. Meaning the company can't pay it's bill when they are due or they have more liabilities than assets (see our A-Z of Accountancy for the descriptions of Accountancy terms).
What happens when a Company is Insolvent?
When a company goes insolvent, it's remaining assets will be sold to it's creditors. After all of the debts have been re-paid to the amount that is possible, the business is liquidated and closed down, and then struck off the Companies House register.
Can a Company survive Insolvency?
There's no straight answer here. It depends on each companies financial circumstances. Not every company who cannot meet it's debts should be labelled as a 'failing' company. It may simply mean they have found themselves in a position where they are relying on third party credit.
Should you find your business in any sort of financial difficulty it is imperative that you act right away. Having your own Accountant can help you spot financial issues ahead of time, so that insolvency will never be an issue.
We have a variety of Wealth Management experts such as Sovereign who are able to help you should you find yourself in this situation.
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