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Azets is urging business owners to take advantage of going concern solutions while they still can after finding that compulsory liquidations doubled in the 12 months to April 2023.
Colin Haig, head of Restructuring at Azets, said he believes the high level of liquidations should have “alarm bells ringing” despite the total number of company insolvencies dipping last month.
The latest monthly statistics for April 2023 found there were 1,685 company insolvencies, 15% lower than in the same month in the previous year. However, there were 183 compulsory liquidations in April 2023, nearly twice the number in April 2022.
Haig said: “The long-term trend in business failures will continue to tick upwards despite the total number of insolvencies dipping last month. More concerning is the number of compulsory liquidations, which continues at double the rate of last year and is also likely to keep rising.
“Liquidation is an end-of-life process. It’s still possible to achieve going concern solutions for quite distressed businesses – but that won’t last.”
He added: “Too many business owners are failing to take advantage of more constructive options. Air cover via a moratorium or restructuring plan remain viable options. My advice to businesses is to face up to problems before an insolvent liquidation becomes the only option, and while capital is still available.
“An uptick in administrations is a much better sign of the UK’s economic resilience than an uptick in compulsory liquidations. Only the latter results in a total demise and loss of all jobs.”
