The Insolvency Service statistics released on 16 July show that in June 2021 Company Insolvencies in Northern Ireland were 22% higher than the same period in 2020 whilst during the same period, Individual Insolvencies were 40% lower.

By comparison in England & Wales during the same comparative periods, Company Insolvencies were up by 63% with 1116 Creditors’ Voluntary Liquidations (CVLs), similar to pre-pandemic levels. Bankruptcies were 17% lower but Creditor Petitions as a proportion of those were up by 27% on the same period. In Scotland, the pattern is similar for Company Insolvencies with a rise of 67%.

The increase in Company Insolvencies appears to be largely being driven by CVLs. It is difficult to be precise at this stage as to the cause for this substantial rise. This may be related to a number of factors such as the reductions in government support, the delay in lifting the final Covid restrictions (particularly for hospitality and retail sectors), and the announcement that whilst there would be a further extension through the summer of existing restrictions on winding-up petitions (where the debts relate to the pandemic) this would end on 30 September 2021. Directors who may have been holding off may simply have realised that it is going to be uneconomic in the future to continue trading.

It should be noted though that unlike England & Wales, in Northern Ireland the latest Bankruptcy & Companies Masters’ Court Guidance dated 16 April 2021 states that the ongoing restriction in presenting creditors’ bankruptcy or winding-up petitions continues. It remains to be seen if Northern Ireland will follow suit given the position in England & Wales but notwithstanding that Directors are clearly pushing ahead with CVLs.

It will be interesting to see if the trend continues over the next few months to ascertain if this is merely a ripple or the effects of the first wave of the expected Tsunami of insolvencies.

If you are concerned about your business, its debts or future prospects, now is the time to take the initiative and obtain expert advice. Please contact our Insolvency team to discuss.