Rise in insolvencies shows pandemic is pushing firms over the edge, says Oldham expert
Date published: 17 January 2021
Oldham insolvency expert Allan Cadman
A rise in the number of businesses going bust in December could indicate that the impact of the pandemic is finally starting to push businesses over the line, says an Oldham insolvency practitioner.
The latest figures from the Insolvency Service show that 1,228 businesses went bust in England and Wales in December – up 38% on the previous month and 9% on December 2019.
It is the first year on year rise since the start of the first UK lockdown.
Allan Cadman, who is North West chair of R3, the trade body for insolvency and restructuring professionals, said: “It’s now a question of when, not if, insolvency numbers further increase this year – especially as the Government’s support packages which have provided a critical safety net for businesses are due to start running out at the end of this quarter.
"Even if the Chancellor extends them again, at some point they will have to come to an end.
"Covid-19 has had a devastating impact on the UK’s economy, which fell by 8.9% in the 12 months to November 2020, and on unemployment levels, which have increased at the sharpest rate for a decade.
"We’ve also seen a number of big brands – including household names – enter insolvency processes or announce restructuring programmes.
“While it’s too early to judge the impact of the latest lockdown, it has further complicated an already muddy economic picture, and will likely have been an additional blow for firms which traditionally depend on a busy festive period.
“Even if the economic impact of stricter lockdown measures isn’t as dramatic as it was during the early stages of the pandemic, it will be serious, and businesses will also start to feel the effects of the change in the UK’s relationship with the EU – though it’s unlikely that this will affect insolvency numbers in the short term.”
Mr Cadman, who lives in Oldham and is also a partner at insolvency firm Poppleton & Appleby, urged struggling businesses to seek help at an early stage.
He added: "As soon as signs of financial trouble surface, it’s time to seek advice from a qualified and reputable source.
"Doing so will allow more options to resolve your situation, and more time to take a considered decision.”
Do you have a story for us? Want to tell us about something going on in and around Oldham? Let us know by emailing firstname.lastname@example.org , calling our Oldham-based newsroom on 0161 633 2121 , tweeting us @oldhamchronicle or messaging us through our Facebook page. All contact will be treated in confidence.