The number of North East businesses in liquidation almost doubled in April compared to last year, new figures from insolvency and restructuring trade body R3 have revealed.
The organisation has studied data provided by Creditsafe which shows there were 78 companies in the North East in liquidation who owed money to their creditors in April – a 95% increase on the April 2023 figure of 40 businesses.
Business Live is also reporting that the North East also totted up the largest number of businesses in liquidation which collapsed owing debts to creditors.
The debt owed by firms in liquidation in the North East last month also rocketed, from April 2023’s debt pile of £154,000 to more than £2.7m.
Kelly Jordan, chair of R3 in the North East and an associate director at Manolete Partners, said: “The spike in companies in liquidation who owe money to their creditors in the North East reflects what has been an unsteady economic climate for businesses up and down the UK, with expensive costs of borrowing, low consumer spending and high inflation.
“These high levels of debt can have a huge domino effect on small and medium-sized businesses. Just one or two unpaid bills can be the final blow to SMEs that are already suffering under the current tough economic conditions, putting them at a higher risk of becoming insolvent. I would urge company directors to seek professional advice if they find themselves facing financial difficulties. There are lots of ways to tackle money worries, and by talking through your concerns at an early stage, more of these options will be available to you and you will have more time to think about how you want to move forward to resolve your concerns.”
The latest data comes a week after new Government figures were released showing company insolvencies had reached levels not seen since the 2008 recession. Data from the Insolvency Service showed 2,177 firms were subject to administrations, compulsory liquidations, creditors’ voluntary liquidations, and company voluntary arrangements in April – an 18% rise compared with March and the same rise on April 2023.
However R3 expressed cautious optimism for the North East, as growth in the UK economy and a rise in the number of new company registrations offered hope for the region.
Ms Jordan said: “Corporate registrations are at a record high, so there are factors at play which suggest some return of business confidence, if not consumer confidence with cost of living pressures still playing their part. Working out what is going on is becoming more nuanced than simply blaming the pandemic, cost of living, inflation and interest rates.”