New data shows the number of companies in Yorkshire facing winding up petitions due to debt has risen 216% over the first five months of the year.
Yorkshire saw 242 winding up petitions in 2022 and 171 in the first five months of 2023, a rise of 216% against the same period last year. While companies going into liquidation as a result of the petitions increased by 63% in the first five months of 2023 against the same period in 2022.
The study, by Fresh Thinking Capital and RSM UK Restructuring Advisory, examined official data to better understand the challenges facing businesses.
HMRC has also increased the number of companies it is taking legal action against. Nationally, in 2022 HMRC sought 1,058 winding-up petitions, which resulted in 522 companies going into liquidation. From January to May, the number of petitions has increased to 1,082 from 110, a rise of 883%.
The national data shows that in 2022 trading creditors issued 2,399 winding-up petitions, which led to 1,107 companies going into liquidation.
A winding-up petition is a legal document filed by a creditor against a company that owes them a significant debt. It seeks to force the company into compulsory liquidation, leading to the company’s assets being sold off to repay the creditors. The petition can be served at the company’s registered office or to specific individuals associated with the company.
Commenting on the trend, Mel Hird, director of Fresh Thinking Capital, said: “There are many good businesses that have built up debt through the pandemic and are now facing short-term cash flow issues. Between HMRC arrears and loans, they need short-term support to trade through this period.
“It’s essential that these businesses find the funding they need to support growth. Funding empowers companies to explore opportunities, expand into new markets, create jobs, and enhance competitiveness against larger firms. We set up Fresh Thinking Capital to help sound businesses through the rough patches. The funding we provide will provide working capital to help management teams get back on track.”
Fresh Thinking Capital is a specialist lender with committed funds that helps businesses and entrepreneurs unlock potential. With a 20-year track record in investing, Fresh Thinking Capital has an experienced team that’s well-positioned to support growth plans.
Lee Lockwood, partner at RSM UK Restructuring Advisory, LLP, said: “It’s important that management teams know that help is available. Our restructuring advisory teams offer clear advice and strategies to find the best solution for all parties. Too often, firms leave it too late in the day to seek help, with winding up petitions and liquidation becoming more likely. It’s clear that things are getting tougher, and if a company sees a cash flow problem arising, they need to seek advice.”
RSM provides audit, tax and consulting services to the middle market. As an integrated team with nearly 4,900 partners and staff operating from 31 locations across the UK.
