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A senior figure at a corporate recovery specialist has warned he is expecting the number of firms to go under to begin increasing from the spring as government support measures to help businesses through the pandemic taper off.

FRP Advisory has worked on several high-profile construction collapses in recent years including those in 2019 of Shaylor and Simons.

According to government figures, the total number of company insolvencies across all sectors in England and Wales last year was 14,048, just over 11% up on the 12,634 in 2020 鈥� but 18% below the 17,166 in 2019.

However FRP partner Glyn Mummery warned: 鈥淭here鈥檚 always a lead in time to insolvencies. I thought they would go up in the last quarter of 2021 but I was proved wrong. I would expect it to start going up in Q2, Q3 this year.鈥�

He said some firms which might have collapsed in the past two years have survived because of emergency rules preventing creditors from issuing winding up petitions against struggling firms during the pandemic. During the pandemic, HMRC has been told not to issue proceedings against firms they normally would have.

Mummery added: 鈥淢y gut feeling is they [HMRC] will be very conscious of supporting UK plc. I think they鈥檙e also fighting other battles such as dealing with financial fraud [associated with the package of covid measures].

鈥淕overnment support has undoubtedly stopped a number of firms failing that ordinarily would have failed. The support was very timely and absolutely necessary. It saved an awful lot of businesses and jobs. Furlough was a masterstroke.鈥�

Mummery said he expected a return this year to the pre-pandemic number of insolvencies, adding: 鈥淭here is going to be a spike but where does the spike stop? Will the number go past normal levels?鈥�

FRP鈥檚 own figures (see box), based on administration data filed at the London, Edinburgh and Belfast Gazettes as well as filings made at Companies House, show the number of liquidations began to go up last year after falling in 2020. But the number of administrations and Company Voluntary Arrangements, which allow firms to pay creditors over a fixed period and avoid going into administration, were still below pre-pandemic levels.

He said struggling firms needed to prepare cashflow forecast plans and 鈥渄emonstrate [to lenders] they鈥檙e well informed about the company鈥檚 financial position and they鈥檝e spotted a problem鈥�.

And he warned against firms taking on too much work as covid restrictions ease and UK plc starts to put the pandemic behind it.

鈥淚鈥檝e seen a lot of companies go bust on exiting a recession,鈥� he said. 鈥淭hey鈥檝e taken on too much and they don鈥檛 have the cash to carry it out. Firms also need to go in with their eyes wide open when they take on a [collapsed] business. They can be landed with very significant contractual issues if they鈥檙e not careful.鈥�

He was speaking as Exeter-based Midas, which was set up in 1976, sank into administration last week. The firm blamed the impact of the pandemic for the collapse which has seen more than 300 jobs go.