Figures released earlier this week by The Office for National Statistics (ONS) show company insolvencies in England and Wales have hit their highest level since the aftermath of the 2008 financial crisis.
The ONS reported that in England and Wales, 5,629 companies went into some form of insolvency in the period between April to June 2022, the most since the third quarter of 2009.
Construction firms made up 20% of all the insolvencies, followed by the wholesale and retail trade industries at 14%.
It will come as no surprise that the reasons why there has been such an increase, particularly in the construction industry, are primarily high energy prices followed by rising costs of raw materials and supply chain disruption.
The increase in the cost of borrowing; continued international supply chain disruption and the energy crisis is expected to tip more companies over the brink and into insolvency over the next few months. And it is expected that when the Government’s cap on non-domestic energy costs ends next spring, more businesses will find it difficult to continue trading.
As we have said in previous articles, directors of companies in distress should take advice on their potential personal liability for wrongful trading: allowing a company to trade whilst insolvent would give rise to a later claim by a liquidator against a director for payment of losses which arose during the time the company was trading whilst insolvent.
Stephensons' commercial law team are advising directors on these issues and other issues affecting businesses at this difficult time. If your business is affected we can assist to provide bespoke advice and assistance. Contact our team on 0161 696 6170.
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