Insolvencies more than doubled in February

Figures released recently by the Insolvency Service show that corporate insolvencies more than doubled in February this year, to 1,515, compared with the same month last year, and were 13% higher than the number registered in February 2020, prior to the onset of the Covid-19 lockdown.  That said, the number of corporate insolvencies fell in February by 3.2% compared with January’s total of 1,565.

In February 2022 there were 1,329 Creditors’ Voluntary Liquidations (CVLs), more than double the number in February 2021, and 40% higher than in February 2020. However, numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were more than twice as many compulsory liquidations and almost double the number of administrations in February 2022 compared to February 2021.

The rise in compulsory liquidations suggests that creditors are now starting to take action over unpaid debt, having been legally prevented from doing so for many months due to measures put in place at the start of the pandemic.

Many struggling businesses have managed to keep afloat by making use of the high level of government support available. However, as they now start to repay Bounce Back Loans, as well as deferred HMRC liabilities, pressure on cash is growing and there may be a continuing increase in business failures.

Meanwhile, the number of bankruptcies in February fell by 36%, to 588, year-on-year, and there were 2,242 Debt Relief Orders (DROs).  This means that the number of DROs registered in February was 61% higher than in February 2021 but remained lower than pre-pandemic levels.

How do February’s stats compare to January’s in 2022?

Figures on corporate insolvencies revealed that they increased by 105.8% in January 2022 compared to the same period in 2021 and 3.4% compared to pre-pandemic levels.

In January 2022, there were 1,358 CVLs, more than double the number in January 2021 and 34% higher than in January 2020.

For help and advice on related matters, please contact our Insolvency Director and Appointment Taker Richard Warwick today.

Source: Gov.UK

Posted in Blog, Insolvency.