- New report reveals there have been over 8,000 company insolvencies since March 2020
- Construction industry hit with the most company insolvencies since March 2020
- Report reveals the liquidation rate of businesses around the UK
- Businesses in Yorkshire most likely to undergo an insolvency event
Business Rescue Expert has analysed data from the past 12 months to reveal the Year of Lockdown report, which reveals the state of businesses, the liquidation rate and the sectors and regions most likely to undergo an insolvency event.
Since the beginning of the first lockdown, 11.2 million workers have been furloughed in the last 12 months which equates to 1 in 3 of the UK’s workforce.
There have been 8,205 company insolvencies from March 2020 to January 2021. Broken down by sector they were:
|Number of insolvencies*|
|Administrative & Support||1,200|
* (March 2020 – January 2021)
The construction industry has been hit the hardest, the halting of various building projects, both large and small scale, badly damaged the construction industry resulting in 1,634 construction company insolvencies.
There were £453.4 million in redundancy pay and other support benefits paid out in 2020, which is the highest amount in ten years and an increase of 31% from 2019.
The report also reveals that Yorkshire and Humber businesses were most likely to become insolvent in 2020.
Additionally, businesses in the North East, North West and West Midlands of England along with London were at greater risk compared to the national average (1 in 207) while Scotland, Wales and every other English region was less likely than the average.
The total number of corporate insolvencies actually fell in 2020, to their lowest recorded levels since 2007. The main reasons are the Government-backed Covid-19 support measures, such as CJRS, BBL and SEISS, the reduced HMRC enforcement activity, the temporary suspension of creditor recovery methods, moratoriums and other insolvency tools launching and the advice from financial service regulators that businesses in financial difficulty should be treated with “forbearance and due consideration”.
Chris Horner, Insolvency Director with Business Rescue Expert said: “Ominously, even with restrictions being lifted and economic activity rising, 2021 will be a worse year for insolvencies in several industries than the year of lockdowns was. Government support in the form of backed loans, furloughs and the temporary ban on winding-up petitions and other creditors actions are all expected to end sometime in 2021.
“Bounce Back Loan repayments and others will begin to come due, businesses will have to decide if they can re employ or redeploy their furloughed workers and creditors that have been under severe financial pressure themselves will finally have the ability to look for repayments that might be critical to their own survival.”
Business Rescue Expert is a leading independent insolvency practice specialising in business rescue advice.
Set up in 2005, they provide dedicated nationwide coverage and have grown to be one of the most respected corporate insolvency practices in the UK, known for their quality client services.