Insolvency statistics published today by the government’s Insolvency Service reveal that there has been a sharp increase in the number of firms being wound up by creditors in the past three months. The number of compulsory liquidations, where a creditor asks the courts to close down a business due to non-payment of debts, increased by nearly 20% compared to the previous quarter.
This looks like a worrying trend, showing that many firms are struggling to pay their way in the continuing economic gloom. Creditors are becoming impatient – many will be suffering with their own financial problems – and they are increasingly prepared to follow through on threats to wind up businesses that cannot afford to pay their bills.
Whilst it may be tempting to keep making promises of payment to creditors, when those promises are broken, the consequences can be catastrophic. The good news is that there are ways of dealing with mounting debts that will allow the company to continue and the sooner that a business owner takes advice, the more palatable the options that are available.
In particular, a Company Voluntary Arrangement (CVA) can be put in place with the help of a licensed insolvency practitioner to protect the company from legal action whilst a turnaround plan is followed, allowing a company to recover from its cash-flow problems. In recent months, Moorhead Savage has set up three CVAs for businesses in the Sheffield City Region, safeguarding dozens of jobs in the process.
If you would like to chat about how we can help your business, call me today on 01709 331300.