Insolvency and Restructuring: R3 Eastern
Figures published in March by the government’s Insolvency Service show that the number of companies in administration increased to a 15-month high and overall levels of corporate insolvencies increased by 121.2% compared to February 2021’s figure of 685.
This increase suggests that there are several insolvent businesses which still have some prospect of rescue, given that this is one of the main statutory purposes of the administration process. Wherever possible, the insolvency profession will work to secure the rescue of businesses in administration, to help ensure better outcomes for the company, its staff and its creditors.
It is evident that the ending of the peak of the pandemic and the lifting of the final set of restrictions, has not led to the shot in the arm the business community had hoped for. Although the economy grew in January and firms benefited from restrictions ending in February, it took time for footfall to increase, and it will take a while longer before anything resembling normality returns.
Consumer spending has declined and, here in Essex, consumer confidence is low, as people are concerned about the economy and their own financial positions. Inflation is now a real problem for local firms and individuals alike, and things are unlikely to improve anytime soon.
In addition to this, the restrictions on using winding-up petitions came to an end at the start of April – something which could see an increase in creditors turning to legal action to recover unpaid debts.
Now is the time for directors to be alert to the signs of financial distress and to take the necessary action. We know conversations about finances are some of the hardest to have, but speaking up about concerns at an early stage typically leads to a better outcome than holding back until the problem worsens.
Free online guide available
To enhance support for Essex businesses, R3 Eastern is offering a free online guide for company directors which explains how to spot signs of financial distress, the options open to them for resolving it and where to find sources of regulated advice.
Entitled Get Back to Business: A guide to dealing with corporate financial distress, it is available for Essex Director readers to download from www.backtobusinessuk.com.
We urge anyone who is concerned that their business could be struggling, to read our guide and to seek appropriate professional advice as soon as possible. Many R3 members offer a free consultation to those who are looking for such help and want to explore their options.
Rescue is always the profession’s priority wherever this is possible, and it is encouraging to know that the restructuring community is better placed than ever to help businesses with financial worries.
Alistair Bacon is Eastern Chair of R3, which is the UK’s insolvency and restructuring trade body. Information on R3’s network of members in Essex and across the UK is available on the R3 website, r3.org.uk.