"Understanding creditors" helping to keep North East insolvencies lower than expected
A significant proportion of North East business owners are working to get over their financial challenges with understanding creditors, according to R3’s North East committee.
R3 is the trade association for the entire community of the UK’s insolvency and restructuring professionals.
In addition, the committee’s feedback is suggesting that, while its members are currently receiving a high number of enquiries about different insolvency procedures, the number of insolvency actions resulting against North East businesses is lower than might have been expected.
The chief factor for this is a lack of pressure being applied by both secured creditors, including HMRC, and unsecured creditors, like businesses in the supply chain that are awaiting payment on overdue invoices.
R3’s North East chair, Alexandra Withers, is recommending that any business owners who think they might be facing problems in the coming months keep their creditors and suppliers onside by communicating clearly with them about their situations, so that they know when they might expect payment on what’s owing.
And she is also advising those who think they may not be able to meet their creditor obligations in the foreseeable future to get qualified advice as soon as possible on their options.
Alexandra, said: “Feedback from our North East members suggests that we’re not yet seeing the significant rise in business insolvencies which might have been expected when the government rules brought in to protect companies in pandemic-related financial distress from creditor action began to be phased out in October.
“But what we’re seeing in practice here is a willingness from many creditors to work with businesses that owe them money, so that they have more of a chance to get their operations fully up to speed once again and trade sustainably in the longer term.”
Recent official business insolvency figures for England and Wales showed another substantial year-on-year increase, with a 63.6 per cent year-on-year rise recorded from the 864 cases registered in October last year up to the 1,405 cases lodged last month.
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