Huge increase in corporate insolvencies

In the final three months of 2022, the Insolvency Service recorded 5,995 company insolvencies, a 30% rise in corporate failures compared to the same period in 2021. This increase was almost certainly caused by the ending of government support for businesses struggling through the pandemic.

Meanwhile, the picture was even bleaker in December 2022 alone, as at 1,964, there was a 76% hike in company insolvencies on the equivalent pre-pandemic figure. The figures also showed that corporate insolvencies rose by 7% year-on-year in January 2023, with the number of compulsory liquidations up by more than 50%.

According to the figures there were 22,109 underlying corporate insolvencies in 2022 in England and Wales, the highest figure since 2009’s 24,035 and a 57.3% increase on 2021’s total. The figures included the highest number of creditors’ voluntary liquidations (CVLs) in 62 years, as more company directors appeared to “run out of road” and closed their businesses.

Meanwhile, there were 1,382 CVLs in January alone this year, a 2% increase on January 2022 and a 37% rise on January 2020. Over the year, there were 189 compulsory liquidations, 52%re than in January 2022, but 36% lower than the same period pre-pandemic. However, this is likely to be because the number of compulsory liquidations remained at historic lows during the pandemic, as wide-ranging restrictions were put on winding up petitions.

Bankruptcies also rose in January, to 612, a 5% increase on January 2022’s figure but a 60% decrease in the figures recorded in January 2020.

Source(s): Insolvency Service

For help and advice on related matters, please contact our Restructuring and Insolvency Partner, Richard Warwick, today.

Posted in Blog, Insolvency.