Registered company insolvencies in April 2022 hit 1,991, more than double the number registered in the same month in the previous year when the figure stood at 925 in April 2021. However, there has been a slight improvement on March 2022 when there were 2,119 corporate insolvencies.
In April 2022 there were 1,777 creditors’ voluntary liquidations (CVLs), more than double the number in April 2021 and 74% higher than April 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were three times as many compulsory liquidations in April 2022 compared to April 2021, and the number of administrations was 51% higher than a year ago.
For individuals, 530 bankruptcies were registered, which was 36% lower than in April 2021.
While CVL numbers are now higher than pre-pandemic levels, numbers for other insolvency procedures, such as compulsory liquidations for companies and bankruptcies for individuals, remain lower.
The ONS commented: ‘These trends are likely to be partly driven by government measures put in place to support businesses and individuals during the pandemic, including temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations), and enhanced government financial support for companies and individuals.’
On 31 March 2022, all of the remaining temporary insolvency measures ended, including the return of winding up orders.
Christina Fitzgerald, president of R3, the insolvency and restructuring trade body, said: ‘The monthly fall in corporate insolvencies has mainly been driven by a reduction in creditors’ voluntary liquidations (CVLs). However, the significant year-on-year rise in corporate insolvencies has been driven by the fact that numbers for this process have more than doubled since April 2021.
‘It suggests that large numbers of directors lack confidence in their ability to continue trading in the current climate, and are choosing to close their businesses now rather than being forced to in the future.
‘The figures reflect the continued toll the economic turbulence is taking on the business community. The boom many were hoping for when pandemic restrictions ended simply hasn’t happened as the UK has moved from one damaging set of economic stressors to another without any time to draw breath.
‘Our advice to any directors who are worried about their business is to seek advice and to do it as soon as possible. We know how hard it is to admit a business you’ve worked to build is struggling, but having that conversation at an early point is likely to result in a far better outcome than if you’d waited and the problem had spiralled.’
Simon Monks, restructuring and insolvency director at Azets, said: ‘We would expect the upward trend in corporate insolvencies to continue as the economy gradually returns to a business-as-usual state. But this should not necessarily be looked upon as a bad thing given the continued availability of capital, which can be utilised to put such resource to better use.
‘There appears to be a realignment of underperforming business as we continue to move away from the pandemic. However, even better performing businesses are being challenged, not least by the cost-of-living crisis, which has led to the biggest squeeze on real wages since records began.’
