A RISING number of bosses have decided to close their businesses after spending well over a year trying to survive the pandemic, an insolvency expert says.

Corporate insolvencies fell slightly in July compared with the previous month, but year-on-year figures were up substantially for the third month in a row.

Southampton-based Mike Pavitt, immediate past chair of the insolvency and restructuring body R3 locally, said: “The month-on-month fall in formal corporate insolvencies was not unexpected. Formal insolvency numbers in past years have often fallen off somewhat during holiday periods and away from recurring triggers such as rent quarter and tax demands.”

He said the year-on-year rise for three consecutive months was potentially “much more significant”.

Corporate insolvencies fell 9.3 per cent to 1,094 between June and July, but were up 13.4 per cent on July 2020.

“Within the overall increase, we have seen, tellingly, a comparatively huge 70.4 per cent increase in Creditors’ Voluntary Liquidations (CVLs) this month compared to July 2020, which confirms that the figures for May and June were no blip and that CVLs are right back up to pre-pandemic levels,” said Mr Pavitt.

“Voluntary liquidations tend to be instigated by company management rather than creditors, and this suggests that an increasing number of directors have decided to close their businesses after spending well over a year trying to survive the pandemic.

“Whilst government support has continued to provide a lifeline for many businesses which would otherwise potentially have failed in an economic climate like this, this July was still a very challenging month and business owners have known for some time now that this support will shortly be withdrawn.

“The delay in lifting the remaining trading restrictions will have hit footfall and spending predictions, meaning that a huge number of Southern and Thames Valley businesses will now have spent more than 15 months under conditions that were wildly different to normal, and have incurred reopening costs from which they have yet to see much benefit.”

Mr Pavitt, who is head of corporate restructuring and insolvency at Hampshire solicitors Paris Smith, added: “With the opening up of the economy, consumer confidence reportedly at pre-pandemic levels, and spending levels higher than they were in 2019, the future does look more optimistic. Having said that, it will take longer for the worse-hit sectors to recover from the pandemic and some will not be so confident that they can recover at all once the government support has gone.

“SMEs are the backbone of the UK economy, but many in the South and Thames Valley have been badly affected by the pandemic, some irretrievably. Even with the economy growing again, patterns of trade have shifted and it will not be possible for every business to return to things precisely the way they were before the pandemic.”