North East insolvency specialist urges businesses to seek advice before it's too late

Insolvency Service statistics revealed there was a 105.8 per cent year-on-year increase from 758 cases of corporate insolvency registered in January 2021 to 1,508 cases.

Alexandra Withers, North East chair of insolvency and restructuring trade body R3, is advising company directors to take steps to address any financial issues they think they may be facing as soon as possible to give themselves the best possible chance of resolving them.

Alexandra Withers is also an associate director at insolvency litigation financing company Manolete Partners plc in Newcastle.

The increase in creditor actions follows on from the start of the phase-out of government rules brought in to protect companies in pandemic-related financial distress from creditor action, which began in October last year and which is scheduled to be complete by the start of April.

Alexandra said: “Compulsory liquidations are now 131.4 per cent higher than this time last year, which would suggest that creditors are now starting to take action over unpaid debt – and with the final pandemic protections due to disappear in just a couple of months, it’s reasonable to expect that this trend will continue.

“Numbers of Creditors’ Voluntary Liquidations have remained similar to the heightened levels recorded this time last month, which also indicates that a significant number of company directors are choosing to close their businesses rather than attempting to carry on trading in the current climate.

“They’ve battled against myriad factors in recent months including new Covid measures, a slowdown in consumer spending and rising inflation, with steep increases in fuel and energy prices proving a particular pinch-point.

Alexandra continued: “After nearly two years of trading through a pandemic, these factors may increasingly become too difficult for many directors to deal with, especially for businesses operating in sectors where the start of the new year is always the most challenging trading period.

“Talking about your financial concerns can be incredibly tough, but doing so as early as possible will give you more potential options, more time to take a decision, and a greater chance of improving your situation than if you wait until it worsens.”

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