Credit, Collections & Insolvency News
Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales increased by 7.5% in July 2022 to a total of 1,827 compared to June’s total of 1,699, and increased by 66.7% compared to July 2021’s figure of 1,096.
The figures 67% higher than in the same month in the previous year (1,096 in July 2021), and 27% higher than the number registered three years previously (pre-pandemic; 1,440 in July 2019).
In July 2022 there were 1,609 Creditors’ Voluntary Liquidations (CVLs), 60% higher than in July 2021 and also 60% higher than July 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the coronavirus (COVID-19) pandemic, although there were 3 times as many compulsory liquidations in July 2022 as in July 2021, and the number of administrations was twice as high as a year ago.
The increase in company insolvencies was driven by an increase in the number of CVLs, which were 60% higher than in July 2019 and also 60% higher than in July 2021. Other insolvency types were lower than in July 2019, although compulsory liquidation numbers were 3 times higher and administrations were twice as high as the number in July 2021.
Of the 1,827 registered company insolvencies in July 2022: 1,609 CVLs, which is 60% higher than in July 2021 and 60% higher than in July 2019. 132 were compulsory liquidations, which is 200% (3 times) higher than July 2021, but 47% lower (half the number) than July 2019;
Five insolvencies were CVAs, which is 17% lower than July 2021 and 87% lower than July 2019.
There were 81 administrations, which is 103% (2 times) higher than July 2021 but 45% lower than July 2019; and no receivership appointments.
Christina Fitzgerald, President of R3, the insolvency and restructuring trade body, said “The increase in corporate insolvencies is being driven by a rise in Creditors’ Voluntary Liquidations (CVLs), which were 59.9% higher than this time last year, and 60.1% higher than pre-pandemic levels in 2019. This suggests that a growing number of company directors are choosing to close their businesses, perhaps because they believe that the current economic conditions make survival impossible.”
“In recent months, economic pressures have been hitting firms from every angle. Inflation remains high and the economy is shrinking, with GDP estimated to have fallen by 0.1% in Q2 of this year and by 0.6% in June, undoing the small boost to the economy we experienced in May.”
“Despite an unexpected rise in consumer confidence last month, people are still being cautious with how they spend their money, meaning many businesses are struggling to bring in the revenue they need to offset spiralling costs.”
“Coupled with this, the number of open job vacancies has continued to grow since the pandemic, while July saw the slowest increase in the number of permanent jobs filled for 17 months. This ongoing labour shortage remains a concern for many small firms that may not be able to afford to raise wages to attract the workers they need to operate at full capacity.”
“Things are only set to get harder this year, so it is more important than ever that anyone running a business knows where to go to seek advice about their finances. Most R3 members will offer a free initial consultation to help business owners better understand their position and outline the potential options available should issues arise.”and a greater chance of finding a positive resolution to your concerns.”
