The latest figures, released by the Insolvency Service, show a 599-increase compared to the 1,515 figure reported in February. This is 112% higher and more than double the 999 reported in March 2021, and is 34% higher than the 1,583 reported in March 2019.
Compared to the last two months, the figure has increased significantly after a stable period from February and the 1,560 reported in January.
The Insolvency Service reported 1,844 creditors' voluntary liquidation (CVLs) in March 2022 which is 109% higher than this time last year. The month’s figure is the highest reported in the last 12 months, before this the highest figure was seen in November 2021 which was reported as 1,512.
In other areas, there was an increase of 297% in compulsory liquidations from this time last year to March 2022 which had 131. It is 22 more than the 109 reported in February, and 13 more than January. It is the highest number reported in 2022 so far.
The number of company voluntary arrangements (CVAs) increased to 10 from the three recorded in February but is still less than the 13 in January.
The number of administrations increased to 129 from 109 reported last month and is a 15-month high after the steady two months of December and January which saw 72 and 71 respectively. Again, there were no receivership appointments reported. The figure is 74% higher than March 2021 but still 26% lower than the pre-pandemic figure.
Rebecca Dacre, partner at Mazars commented: ‘Businesses that were just hanging on before the recent interest rate rises have seen the rise in borrowing costs push them over the edge.
‘Between interest rates and inflation, this is the most difficult period for businesses since the height of the pandemic. This time they are having to manage without government support. UK businesses will be hit by the ‘cost of living crisis’, just as consumers will be.’
Mazars highlighted that the moratorium on winding up petitions ended on 31 March and this prevented creditors from applying to make a business insolvent because of unpaid debts during the pandemic period.
Darce added: ‘With no more government protection from their creditors, even more businesses can be expected to fail. Insolvency practitioners are now busier than they have been in a very long time. There has long been talk of a ‘wave of insolvencies’ that would happen once the insolvency moratorium was lifted. We are now starting to see it.’
Regarding individual insolvency statistics, 633 bankruptcies were registered in March 2022, which was an increase of 85 since last month, made up of 549 debtor applications and 84 creditor petitions.
Overall compared to March 2021, bankruptcies were 39% lower, debtor applications were 41% lower and creditor petitions were 20% lower.
The Insolvency Service reported 2,512 debt relief orders (DROs), which is 88 higher than February’s figure of 2,414 and is 58% higher than last year’s figure of 1,591 and 3% higher than 2019. It was noted that this is the first time since the start of the Covid-19 pandemic that the number of DROs has been higher than the pre-pandemic comparison.
The Insolvency Service stated that the increase was also likely caused by the expansion of the eligibility criteria for debt relief orders in June 2021.
Commenting on the individual statistics, Louise Brittain, R&I partner, Azets, said: ‘March 2022 saw a return to pre-pandemic levels of personal insolvency being driven by debtors seeking relief from increasing levels of debt. Bankruptcies, debt relief orders, and individual voluntary arrangements (IVAs) have all increased on last quarter’s numbers.
‘March is always a busy month for IVAs and this is not surprising bearing in mind the huge increases in the cost of basic living requirements and the rise in National Insurance (NI). As households continue to struggle, we can expect these numbers to continue to rise.’
