The number of businesses applying for Company Voluntary Arrangements saw a 41 per cent year-on-year increase in September, according to the Insolvency Service’s monthly insolvency figures for England and Wales.
The figures have also revealed the underuse of the new moratorium which was used just twice in September. The moratorium was introduced under the Corporate Insolvency and Governance Act 2020 in June and is designed to give struggling businesses breathing space in which to explore rescue and restructuring options, free from creditor action.
It comes as the overall number of company insolvencies across England and Wales in September stood at 926, comprised of 742 creditors’ voluntary liquidations, 44 compulsory liquidations, 109 administrations and 31 company voluntary arrangements.
In terms of individual insolvencies, there was a 37 per cent reduction in debt relief orders and a 24 per cent reduction in bankruptcies in September 2020, compared with the same month last year.
Reacting to the figures, CVR Global’s Tom Gardiner said: “The rise in Company Voluntary Arrangements underlines just how important this insolvency tool is going to be to ensure the impact of Covid-19 and Brexit are managed over the coming months.
“It shows that debtors and creditors are working together to come to sensible arrangements on debt – an approach that is needed now more than ever as government support is now altering with the stated aim of supporting viable businesses.
“It is perhaps not surprising to see the moratorium being underused, however the government was right in extending its deadline to the end of the year, as I’m afraid demand is likely to surge for this process together with all other “tools” at Insolvency Practitioner’s disposal the further we travel into winter. This will, of course, particularly effect those businesses impacted by the Government’s new tiered lockdown system.”