Credit, Collections & Insolvency News
Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales decreased by 7.2% in June 2022 to a total of 1,691 compared to May’s total of 1,822, but were still 40.1% higher compared to June 2021’s figure of 1,207.
Of the 1,691 registered company insolvencies in June 2022 there were 1,456 CVLs, which is 30% higher than in June 2021 and 44% higher than in June 2019. 136 were compulsory liquidations, which is 258% (3.6 times) higher than June 2021, but 51% lower (half the number) than June 2019. Eight were CVAs, which is 43% lower than June 2021 and 77% lower than June 2019 There were 90 administrations, which is 131% (2.3 times) higher than June 2021 but 40% lower than June 2019; and there was one receivership appointment.
Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were 3.6 times as many compulsory liquidations in June 2022 as in June 2021, and the number of administrations was 2.3 times higher than a year ago.
The number of company insolvencies was 15% higher than in June 2019 and 40% higher than the number in June 2021. The increase in company insolvencies was driven by an increase in the number of CVLs, which were 44% higher than in June 2019 and 30% higher than in June 2021. Other insolvency types were lower than in June 2019, although compulsory liquidation numbers were 3.6 times and administrations were 2.3 times as high as the number in June 2021.
Between 26th June 2020 and 30th June 2022, in England & Wales, 39 moratoriums were obtained and 12 companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.
Commenting on the figures Nicky Fisher, Vice President of R3, said “The monthly fall in corporate insolvencies has mainly been driven by a reduction in Creditors’ Voluntary Liquidations (CVLs), a procedure initiated by directors of insolvent firms to close their company. This fall in corporate insolvencies matches May’s unexpectedly positive GDP figures – however business owners should not be complacent given the ongoing economic pressures which will start to be felt in insolvency numbers in the next few months.”
“Despite these positive statistics, inflation continues to have an impact on all aspects of business with input costs and overheads heading in the wrong direction. Not only are directors facing immediate strain to deal with this inflationary pressure, but they will also be looking at re-evaluating investment decisions and wider business strategies in the medium-term. This is likely to act as a further drag on the economy in the months ahead.”
“At the same time, consumer confidence has hit its lowest point since the start of the pandemic, bringing down consumer spending, which could mean that sectors such as travel, retail and hospitality could particularly struggle as these are the things people usually cut first.”