RECORD numbers of business people are “cashing out” by paying their debts and liquidating their companies, a business recovery firm has said.

Whiteley-based Portland said the past 12 months had seen a 60 per cent rise in the number of solvent liquidations, where creditors are paid and the remaining balance distributed among shareholders.

During 2020, the firm paid out more than £56million to shareholders of more than 80 companies, including collection of debts and refunds of £6m.

Portland says the companies it assisted included local business and large national brands. They included an app development company, a long-established printing firm, a global wind turbine business, a number of IT and management consultancies and a hotel which sold its property and business assets.

All were subject to members’ voluntary liquidation, a formal process which Portland says is cost-effective and results in shareholders receiving a tax-efficient return on their investment – usually with the benefit of business asset disposal relief, previously called entrepreneurs’ relief.

Portland managing director Carl Faulds said: “Although we have paid out a record amount of money to shareholders, the other side of the coin is over the last 12 months we have seen a lot of anxiety in the business world due to unprecedented events.

“In the UK, we really did experience the perfect storm in 2020. As well a global pandemic, the UK had to contend with the reality of a no deal Brexit. These two factors, combined with the fact that it has been 11 years since the last economic downturn and the cycle typically comes round every 8-10 years, has meant 2020 was the year a majority of businesses would like to forget.

“Businesses, even those that are profitable, have some very tough decisions to make in the coming months. They could hold off until the economy restarts, which means a return to regular trading and profitability, or they may not risk an uncertain, potentially volatile, future and decide to sell up or close and retire early. However, they will still have to consider the next Budget which will no doubt see the chancellor, Rishi Sunak, try to recoup some of billions of pounds used to keep businesses afloat during the pandemic.”

He said an increasing number of companies were struggling because of rising costs at a time of stagnant or falling sales. “Whilst the government is continuing to support businesses during these difficult times, there is no bottomless pit of grants and loans to bail out businesses,” he said.

He added: “Traditional businesses such as retail, hospitality and manufacturing have been particularly hit by the global pandemic where they have seen their income, in some cases, drop to zero. They are also seeing employment costs increase as a result of wage rises and to meet increasing employer pension cost obligations. Add to this that the government’ Coronavirus Jobs Retention Scheme (CJRS) – known as furlough –will come to an end in April, many directors have some very difficult decisions to make in the coming month regarding business viability.”