‘Zombie companies’ kept afloat by Government help in pandemic are now going under, says Yorkshire asset disposal firm

BPI said that this year, some of the main sectors it had seen suffer were engineering, retail and hospitality.

The firm helps companies to dispose of assets in order to raise money, as well as selling off assets for those which have gone out of business.

Henry Spencer, operations director at BPI, said: “We have definitely seen an increase in liquidation over the past year, and that is down to the zombie companies which were kept afloat by furlough going under.

“And it's only just really started, this year has been the first time that we’ve seen some of those businesses start to go under, which has been dreadfully sad for people.

“It's got to the stage now with the economy and on the back of covid that numbers are definitely increasing, and we’re seeing that in a lot of the reasons businesses are selling. Interest rates and borrowing costs going up also play a massive part in that.”

The latest data from The Government’s Insolvency Service shows that one in 180 companies registered on Companies House went into insolvency between June 1 2023 and May 31 2024.

The data shows that in May 2024, 271 companies entered compulsory liquidation in England and Wales, while 1,590 went into creditors’ voluntary liquidation. 126 entered administration and 19 entered company voluntary arrangements.

These figures show a six per cent drop in company insolvencies from April 2024 to May 2024, and a 21 per cent drop year-on-year. May last year, however, saw the highest number of monthly company insolvencies since October 2008.

Mr Spencer added that BPI had also seen an increase in the number of retirements it was called in for in recent months.

He said: “We’re seeing a lot of retirements at the minute. With higher operational costs for companies, especially in a lot of the cottage industries like woodworking, engineering and manufacturing, I think a lot of people are thinking it isn't worth it any more, and asking what the point is in staying open.”

Mr Spencer said, however, that despite macroeconomic issues, BPI is still seeing strong business confidence in Yorkshire.

He said: “Business owners are currently concerned about the broader global economy. This uncertainty, coupled with higher borrowing costs, is causing significant challenges for many businesses. However, the strong Yorkshire spirit ensures that as one business fails, another often emerges with a significantly lower cost base.

"Yorkshire has a remarkable track record of producing world-class entrepreneurs, and we are confident this will continue.”