Despite the rise in both corporate and personal insolvency numbers in March compared to the previous two months of this year, the overall number of businesses and individuals to have entered a formal insolvency process this year is way down on Q1 2020 and recent years.
There were 307 more corporate appointments in England & Wales for March with an increase in Creditor Voluntary Liquidations and Administrations.
Scotland recorded 17 more corporate insolvency appointments than in February but still a 43% decrease compared to March 2020.
Personal insolvency figures in England and Wales showed us that bankruptcy and Debt Relief Orders are lower than a year ago but IVAs jumped up by close to 50% compared to the figures recorded in February.
What can we interpret from this slight rise in the insolvency rate for March?
Clearly government support is still propping up many businesses that ordinarily may have otherwise entered a formal insolvency procedure. The rise in corporate insolvencies in March is likely to be the first month of a continual upward curve as the UK economy starts its recovery with many businesses reopening in April.
The national lockdown has forced business owners to learn and adopt new ways to trade and engage with their customer base but as restrictions start to lift, caution will still need to still be applied. The balance now will be for businesses to consider the full costs of reopening (staff wages, suppliers, approved protective equipment etc) versus the revenue generated from trading openly with the public.
April and May’s insolvency figures will make for interesting comparison to the numbers seen in Q1 but with government support still in play, insolvency rates will still remain relatively low.
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