CG&Co has warned businesses operating in every sector not to take “false comfort” from the latest insolvency figures.
Government data showed there were 3,883 company insolvencies in England and Wales in the first quarter of 2020, representing a decrease of 8.5 per cent from both the previous quarter and the same period in 2019.
CG&Co, which specialises in business recovery and turnaround, asserts that the new figures released by the Office for National Statistics (ONS) cannot reveal any “real insight” about the current state of the economy in the wake of the coronavirus pandemic.
Partner Daniel Richardson explained: “These figures would potentially have been encouraging for many businesses operating in England and Wales if it hadn’t been for the outbreak of coronavirus.
“But we’re now living through truly uncharted times and the UK-wide lockdown which commenced on March 23 only features in the last week of the statistics.
“Consequently, it seems fair to assume that the quarterly and year-on-year decreases in corporate insolvency numbers simply aren’t going to last given the current economic climate.”
Daniel asserts that a possible reason for the improved results in the first quarter of 2020 was because many companies had bolstered their working capital facilities before the EU departure date at the end of January.
He concluded: “The figures for the current quarter that runs until the end of June – and those that follow afterwards – will be far more indicative of coronavirus’ true impact on UK plc.”
According to the latest figures from the ONS – published 30-04-2020 – there were 3,883 company insolvencies in the first quarter of 2020 in total.
Creditors’ Voluntary Liquidations (CVLs) were the most common type of company insolvency, accounting for 70 per cent (2,708) cases, followed by compulsory liquidations (18% – 701).
The remaining 12% was made up of all other types of company insolvency.