Real impact of Covid yet to unfold
NEW figures are yet to show the expected increase in Covid-19-related insolvencies, according to the R3 trade body for Newbury.
The official government statistics from The Insolvency Service reveal that company insolvencies in the second quarter of 2020 – April, May and June – fell while personal insolvencies increased.
According to the new data for England and Wales:
I The overall number of company insolvencies fell by 23 per cent in Q2 2020 compared with Q1 (from 3,848 to 2,974).
I The number of company insolvencies for Q2 was down 33 per cent compared with 2019 (4,425). I Total individual insolvencies in Q2 increased by 12 per cent (32,153) from Q1 (28,747) and by seven per cent from Q2 2019 (30,076).
The full picture for both sets of figures is yet to materialise, according to the insolvency restructuring trade body R3.
R3 Southern and Thames Valley chairman Garry Lee said: “Despite the fact we’ve had the lowest quarter for corporate insolvencies since 2010, now is not the time to be lulled into a false sense of security.
“We have not seen the full impact of Covid-19 on businesses in Newbury because of the lifeline the Government’s support has provided.”
Mr Lee, who is an associate director in the recovery and restructuring services team at accountancy firm Smith and Williamson, added that issues around holding court hearings and the ban on winding-up petitions had also contributed to the fall.
The rise in individual insolvencies was driven by a significant quarterly increase in Individual Voluntary Arrangement (IVA) numbers.
They were the most common of individual insolvencies (78 per cent of cases), followed by Debt Relief Orders (15 per cent) and bankruptcies (eight per cent).
Mr Lee said: “The fall in numbers of bankruptcies and Debt Relief Orders might indicate there is a potentially uneven distress.
“This is because those who earn less tend to opt for IVAs and DROs, while bankruptcies are typically used by those with more assets or higher incomes.”
He added: “It’s important to note that while today’s figures indicate how the pandemic is affecting some indebted people, the expected increase in individual insolvencies is yet to materialise fully.
“The best thing anyone in Newbury who is worried about their finances can do is to get advice from a qualified professional as soon as possible.
“The earlier they do, the sooner they can begin to resolve their financial issues, and the better chance they have of improving their situation.”
Visit www.r3.org.uk and https://www.gov.uk/government/ organisations/insolvencyservice for more details and full figures.
spread
of
financial