Corporate insolvencies fell in the first quarter despite the economic impact of coronavirus, figures released today show.
Office for National Statistics data showed there were 3,883 company insolvencies in the first quarter, a decrease of 8.5 per cent from both the previous quarter and the same quarter in 2019.
Duncan Swift, past president of insolvency and restructuring trade body R3, said: “Today’s quarterly and year-on-year decrease in corporate insolvency numbers is highly unusual given the circumstances and climate, and very unlikely to last.
“The impact of the coronavirus on every aspect of the business world is hard to overstate, and almost all companies, from multinationals to microbusinesses, have been affected.
He added: “Government support on an unprecedented scale has been offered to companies and employees via the employee support scheme, state-backed business loans and grants, the suspension of business rates, a VAT holiday, the suspension of evictions from commercial properties for non-payment of rent, and so on.
“All of this is welcome, but it is clear that it will not have been enough to keep every company afloat, especially those which had entered the crisis period with existing debt problems.
Jo Windsor, restructuring and insolvency partner at Linklaters, said: “These figures reveal little about the impact the lockdown measures have had on the economy and it might not be until the end of this quarter before the true cost of the crisis emerges.
“We should expect a very significant rise in insolvencies, especially once the lockdown starts to be lifted, and government support initiatives such as furloughing start to be withdrawn, as creditor pressure will grow and it will become clear that, in a world of social distancing, many businesses will no longer be viable in their existing form.”
The ONS said the statistics “largely predate the emergence of, and response to, the coronavirus pandemic”.
However, it warned: “Some statistics may have been affected where individuals, insolvency practitioners, intermediaries (who process debt relief orders) and courts were unable to process insolvencies in the usual manner during the latter part of March.
“Therefore, some caution needs to be applied when interpreting trends in numbers of insolvency recorded in the most recent quarter.”