'Director fatigue' helping to push up business insolvencies, says North West expert

Corporate insolvencies during the three months to the end of September were the highest of any third quarter in over two decades, according to the latest government figures.

They also show the number of creditors’ voluntary liquidations (CVLs) – where directors close their business voluntarily – was the second highest on record.

Now a leading North West insolvency expert has claimed that 'director fatigue' is one of the key factors behind the rise. Fran Henshaw, North West chair of R3 and Head of Corporate Recovery and Insolvency at Beever and Struthers, said: “A combination of rising costs, director fatigue and increased creditor pressure mean more firms are turning to a corporate insolvency process to resolve their financial issues.

“The key driver of the numbers is the rise in CVLs, which have reached their second highest figure on record and the highest number ever recorded in Q3. After years of battling through the pandemic, supply chain issues, increasing costs, rising inflation and requests for higher wages, many directors have simply had enough and are calling it a day while that choice is still theirs."

The figures show there were 6,208 seasonally adjusted corporate insolvencies in England and Wales during the quarter, down 2% on the previous quarter but 10% higher than the third quarter last year and 41% higher than in 2019 before the pandemic.

Fran Henshaw adds: “Trading conditions are tough right now. People are worried about money and reluctant to spend on anything other than the basics – and even then, are looking for the best deal possible – while costs are rising and the economy remains turbulent.

“The Christmas period is a crucial time for a large number of firms – and this year could be make or break for many, especially those in retail and hospitality. It remains to be seen whether this year’s Christmas trading period will be the shot in the arm or the final blow for those that are struggling, and we may see a surge in insolvencies in the New Year if it’s the latter.

“Anyone worried about their business finances should seek advice as soon possible. Speaking to a qualified advisor what an early stage will give you more potential options for resolving them.”