Insolvency rates are beginning to rise across England and Wales as the economic damage caused by the coronavirus pandemic starts to kick in.
According to the Insolvency Service, there were 1,028 bankruptcies, 1,591 debt relief orders (DROs) and 8,322 individual voluntary arrangements (IVAs) recorded in March.
This made a total of 10,941 personal insolvencies, marking a 60% increase compared with 6,828 in February. The total was also 40% higher than the 7,815 personal insolvencies in March 2020.
And 992 company insolvencies were registered across England and Wales in March, which was 20% lower than in March 2020, but up from 685 the previous month.
Insolvency trade body R3 said that the government’s Covid support initiatives had postponed rather than prevented the true picture being shown.
Christina Fitzgerald, vice president of R3, said: “The monthly rise in corporate insolvencies comes after 11 months of relatively low levels of company insolvency procedures, as the Government’s support has provided many businesses with a vital lifeline and removed many of the traditional prompts and triggers for seeking financial advice.
“As lockdown restrictions continue to unwind, there are reasons to be optimistic. Many businesses have adapted and reinvented themselves during the pandemic and may be in a better position for the coming months as a result.
“We may also see consumer spending increase, but companies need to be aware of the risks of over-trading if they don’t have the cash flow needed to cover the full costs of reopening and restocking. They need to plan for a sustainable reopening of their businesses.”