Corporate insolvencies across England and Wales rising

The latest figures from the Insolvency Service show that the number of corporate insolvencies across England and Wales more than doubled in April on a year-on-year basis.

The increase follows the phasing out at the start of April of the remaining elements of government rules brought in to protect businesses in pandemic-related financial distress from creditor action.

At the same time, restrictions preventing commercial landlords from issuing winding-up petitions against limited companies for unpaid rent during the pandemic also expired.

This rise from 925 cases of corporate insolvency registered in April 2021 to 2,114 in April this year highlights the key role the Government’s support initiatives played in preventing the economic damage of the pandemic from translating into an increase in corporate insolvencies.

During the month there were 1,777 Creditors’ Voluntary Liquidations (CVLs), more than double the number in April 2021 and a whopping 74 per cent higher than April 2019.

However, numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were three times as many compulsory liquidations in April 2022 compared to April 2021, and the number of administrations was 51 per cent higher than a year ago.

There were 530 bankruptcies registered in April 2022, 36 per cent lower than in April 2021 and 64 per cent lower than the pre-pandemic comparison month of April 2019. However, there were 1,708 Debt Relief Orders (DROs) in April 2022, a 20 per cent rise from the year before but 29 per cent lower than April 2019. This is likely to be because of the changes to the eligibility criteria on 29 June 2021, including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000.

Posted in Blog, Insolvency, SMEs / Business.