According to data from the Insolvency Service, the annual rate of company insolvencies in England and Wales is now the highest it has been in 8 years.
Insolvencies fell sharply during the pandemic as the government underwrote 80 billion pounds in loans to 1.7 million businesses and restricted creditors’ ability to take legal action to recover debts.
In the 12 months to August 2022 a total of 20,512 company insolvencies were registered with the Insolvency Service, this is 26% higher than any calendar year between 2014 – 2018.
The peak was in March 2022 with 2,114 company insolvencies, with the vast majority of these companies being placed into creditors voluntary liquidation. Unsurprisingly, this coincided with the end of the COVID support measures. Reports suggest many of these were “Zombie” companies.
During August the number dropped marginally to 1,993 formal insolvency processes:
- 1,662 creditor voluntary liquidations
- 142 compulsory liquidations
- 116 administrations
- 13 company voluntary arrangements
It’s not just the UK, those still in the EU are also reporting a rise in the levels of insolvency, Germany reported a 26% annual rise for the year ending August 2022.
We have seen a greater number of enquiries this year, by the end of September we had been appointed on 52% more cases than for the whole of 2021.
It seems that a continuing upward trend in company insolvencies is most likely in the weeks and months ahead, which could be accelerated if inflation and interest rates also continue to rise.
The key message is still very much, seek advice as early as possible, as this maximises the available options.
From the start of the pandemic until mid-2021, numbers of bankruptcies and Debt Relief Orders (“DROs”) were low compared to pre-pandemic levels. This is likely to be due to the financial support measures available to individuals during that time.
The number of bankruptcies have continued to remain low with only 565 registered in August 2022, which was 10% lower than in August 2021 and 58% lower than in August 2019.
However, the number of DROs has increased following the change in eligibility criteria, the level of debt increased from £20,000 to £30,000 from 29 June 2021.
Personal Debt Respite Scheme
This scheme has now been in place for over a year. This scheme was designed to give people in debt, breathing space in which to deal with their creditors.
If you need any insolvency advice, please speak to our experienced team today.