BUSINESSES have been warned to plan for the phasing out of government aid as the Covid crisis eases.

Insolvencies among companies and individuals fell last month, with support still in place to counteract the effects of the virus.

But many triggers for insolvency – such as winding-up orders and repossession notices – are “out of the picture”, says R3, the trade body for restructuring and insolvency professionals.

Garry Lee, chair of the R3 Southern and Thames Valley region, which covers Hampshire and Dorset, said “Despite the fall in insolvencies, February continued to be tough for businesses, individuals and the economy.

“The national lockdown meant people weren’t able to celebrate Christmas and New Year as they have traditionally, which will have hit a crucial trading period for many businesses, and had an impact on their success – and in some cases, survival – through the first quarter of this year.”

Corporate insolvencies fell by nine per cent in February compared with the previous month, to 686, and were 49 per cent lower than in February 2020.

Personal insolvencies fell 18 per cent month on month, to 6,816, and were 21 per cent lower than the same month last year.

But Mr Lee said bankruptcies and debt relief orders – which can indicate more severe debts – rose by 14 per cent on the previous month.

Mr Lee, an associate director at accountancy firm Smith & Williamson’s Southampton office, added: “Government support has been and continues to be a lifeline for many. However, it has stemmed rather than stopped the flow of insolvencies we would expect to see in this kind of economic climate.

“In addition, the usual ‘trigger points’ for action, such as winding-up petitions or repossession notices, are out of the picture at the moment.

“Our members say that many company directors are putting off examining their options as a result.

“Now is the time for them to make the most of the government’s decision to extend its support packages and plan ahead for when these measures end, and for anyone worried about their personal or business finances to seek advice from a qualified, regulated source about resolving their situation.”