New figures released by the Insolvency Service show that the number of registered company insolvencies in December 2022 was 1,964, a 32% increase on the same month in 2021 and 76% higher than the number registered in the pre-pandemic month of December 2019.

Of the total, 183 were compulsory liquidations, more than three and a half times as many as in December 2021 and 8% higher than in December 2019. However, at 1,659, the bulk of the insolvencies were made up of Creditors’ Voluntary Liquidations (CVLs), an increase of 22% on December 2021 and more than twice as many as December 2019.

Meanwhile, the numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic but were higher than in December 2021.

Insolvency numbers were artificially low during the pandemic because of the Government’s financial support for businesses, as well as specific temporary measures that helped companies restructure and avoid entering an insolvency process.

However, an increase in the number of winding up petitions being filed is widely seen as a sign of future distress and creditor sentiment, while Directors are understandably concerned about inflation and spiralling overheads.

While the number of business insolvencies is distressing, at 397, the picture is brighter for the number of individuals going bankrupt, showing a 13% decrease in the year-on-year number and a 64% decrease on December 2019.

That said, at 7,233, the average number of Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending December 2022, rose by 9% from the three-month period ending December 2021, and was a 26% increase on the three-month period ending December 2019.

Source(s): Gov.UK