Insolvency specialists in the North East are bracing themselves for soaring numbers of company collapses, despite seeing a recent fall in administrations and liquidations.
The Insolvency Service published its latest monthly report which shows there were 778 corporate insolvencies across the 海角视频 during August compared to 961 in July.
The August figure is just more than half of the number for the same month in 2019 at 1,369.
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However, Alexandra Withers, North East chairwoman of insolvency and restructuring trade body R3, says the latest figures do not yet reflect the toll the coronavirus pandemic is taking on regional businesses.
Despite the drop, Ms Withers is warning a significant upsurge in corporate insolvencies is likely in the coming weeks.
She said: “The decrease in corporate insolvencies over August was driven by a drop in administrations and compulsory liquidations.
“Despite this news, there is no question the pandemic is having an impact on regional businesses which is not yet being reflected in the insolvency figures.
“With a number of temporary Government measures aimed at reducing insolvency numbers set to come to an end soon, this situation may start to change before long.
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“The Government’s support measures have provided vital protection for businesses and consumers but as they begin to wind down and this crucial safety net disappears we expect to see more requests for both corporate and personal insolvency advice and support.”
The Coronavirus Job Retention Scheme, under which one in three 海角视频 companies have put at least 75% of their workforce on furlough, is due to end on October 31, with the Coronavirus Business Interruption Loan Scheme closing on September 30.
Ms Withers, who is an associate solicitor in the insolvency department of Short Richardson and Forth Solicitors in Newcastle, said: “This is a worrying time for the 海角视频, its economy and its business community.
“Unemployment is increasing, business debt is rising and, despite growth in July, the economy is still nearly 12% below pre-pandemic levels.
“More big brands have announced cuts in staffing levels over the last month as they attempt to steer their way through the new landscape created by the pandemic, while many SMEs with staff on furlough may realise, when the scheme ends, they are unable to sustain previous staffing levels and will have to consider redundancies.
“Our members are saying requests for advice and support are becoming less restructuring-focused than they were at the start of the pandemic and enquiries for formal insolvency support are growing in volume, although they are still lower than might have been expected.
“Insolvency and restructuring professionals expect enquiry levels to grow as the furlough scheme ends, and when CBILS loans become due for repayment early next year.”