Insolvencies more than halve in the first six months of 2021
The number of corporate insolvencies seen across the North West region more than halved during the first six months of 2021.
This was largely thanks to government COVID-19 support measures and a supportive lending community which continued to help businesses trade their way through the pandemic.
Analysis of notices in The Gazette by Interpath Advisory reveals that a total of 50 North West-based companies fell into administration from January to June 2021 – down from 103 in H1 2020 and 125 in H1 2019.
This regional trend mirrors that seen across the UK.
Nationally, a total of 301 companies fell into administration or receivership from January to June 2021 – down from 655 in H1 2020 and 686 in H1 2019.
The analysis comes following publication of new figures from HM Treasury which reveal that nearly £80bn of emergency government-backed loans were received by UK businesses during the COVID crisis.
Rick Harrison, managing director and head of the North West team at Interpath Advisory said: “The dichotomy of having historically-low insolvency rates at a time of significant economic crisis is naturally prompting concern in some quarters that the taxpayer is propping up an army of zombie companies.
“But while it is fair to say that insolvencies are being supressed artificially thanks to the raft of support available, we also know there are lots of good businesses out there whose balance sheets are broken solely due to the impact of the pandemic – so it is only right they continue to be given the time and the support to be able to build their way back out of the crisis.”
Rick continued: “Enormous credit must be given to local business leaders who on the whole have navigated their businesses well during one of the most challenging periods in corporate history.
“Nevertheless, with some of the COVID support measures, including the Job Retention Scheme now starting to unwind, it would be easy to assume that we have reached the bottom of the cycle and that insolvency levels will start creeping back up again during the second part of the year.
“This may well be the case, albeit I’m personally not so sure cases will escalate rapidly – all stakeholders, including banks and HMRC, continue to be pragmatic in their approach to companies experiencing difficulties as a consequence of the pandemic and there is lots of cash available from investors ready and waiting to be deployed. So while insolvency practitioners will inevitably get busier, I don’t think we will see the deluge of corporate failures across the North West that many have predicted.”
