Formal insolvencies to increase as furlough ends, Azets warns

Azets restructuring and insolvency partner Meghan Andrews, has suggested that the number of formal insolvencies will continue to increase as furlough comes to an end and the moratorium on winding up petitions is lifted at the end of September.

Her expectation follows the recently released July 2021 corporate insolvency statistics for England and Wales.

She claimed that this increase in corporate insolvencies when compared with the same month last year “is not surprising”. July, which saw the lifting of the final lockdown restrictions, meant that businesses will have had to start making payments in relation to their BBLS and CBILS loans.

Andrews said: “Whilst the overall number of corporate insolvencies has not yet returned to pre-Covid levels, the number of CVLs seen in July is in line with the numbers seen prior to the pandemic, which could be indicative that CVL numbers will shortly exceed pre-pandemic levels.

“As UK businesses try to find the new normal and government support initiatives come to an end, management will need to ensure they are properly advised, and their advisors understand the needs of their business to help them navigate the challenges that lie ahead.”

She added: “SMEs may be particularly vulnerable over the next six months and as the largest provider of accountancy and business advisory services to SMEs in the UK, we will be working closely with our clients to provide them with the advice and support that they need with their businesses during this time and beyond.”