38% year-on-year increase in company insolvencies in October

This was 38% higher than during the same month in 2021, when 1,410 took place – and was 32% higher than the pre-pandemic figure of 1,477 in October 2019. This year-on-year increase was driven mainly by compulsory liquidations and creditor voluntary liquidations (CVLs). 

When it comes to compulsory liquidations, this is the first month in which the number – 242, which was 357% more than in October 2021 – has been similar to the pre-pandemic comparison month, with it two percent higher than in 2019. This has been partly caused by a large number of petitions from a single bank – which accounted for 45 of the compulsory liquidations this month. 

As for CVLs, 1,594 took place – which was 28% higher than in October 2021, and 53% higher than in October 2019. Additionally, 107 administrations took place – which was 13% higher than in October 2021 but 33% lower than in October 2019.  

The number of company voluntary arrangements (CVAs), meanwhile, was the only one that saw a drop in both the year-on-year and pre-pandemic figures with the five CVAs being 69% lower than in 2021 and 86% lower than in 2019. There were no receivership appointments.  

Looking at the month-on-month figures, overall company insolvencies increased by 15.7% when compared to the 1,684 recorded in September.  

Responding to this, R3’s vice president Nicky Fisher said: “A series of economic issues, the end of temporary insolvency legislation, and a lack of a post-Covid bounce have hit all parts of the economy hard and have resulted in more directors choosing to close their businesses and more creditors calling in debts as a means of balancing their own books.   

“The current outlook is tough for many businesses as costs rise and consumer confidence remains low. Worries about the price of food and fuel as winter approaches means many people are saving their money ahead of their bills coming in and simply aren’t spending – and a range of businesses, including household names, are struggling as a result.  

“On top of this, business owners are worried about the economy, the prospect of an imminent and prolonged recession, and where they’ll find the money to meet employees’ requests for increased pay as their own costs of living increase.  

“The jury is still out on whether the Christmas trading period, which will include an unseasonal football World Cup, will lead to the traditional boom many businesses are hoping for or whether disappointing sales over the festive period will lead to businesses turning to an insolvency process to resolve their financial issues.”  

Looking at individual insolvencies, 1,894 debt relief orders (DROs) and 531 bankruptcies took place in October 2022 in England and Wales. The number of DROs that took place was 25% lower than in October 2019 and two percent lower than in 2021.  

The bankruptcies were made up of 469 debtor applications and 62 creditor petitions. These monthly numbers were lower than those seen in 2020, which were already lower than the pre-pandemic levels – dropping by 14% when compared to October 2021 and 62% lower than 2019.  

Debtor applications, meanwhile, were nine percent lower than in 2021, and 62% lower than in 2019. As for creditor petitions, these were 37% lower than in 2021 and 74% lower than in 2019. 

The Insolvency Service also detailed the number of individual voluntary arrangements (IVAs) to have taken place in the three months to October 2022. On average, 7,160 IVAs were registered during this period – eight percent higher than for the three-month period ending in October 2021 and 13% than during the three months to October 2019.  

Fisher said: “Money worries continue to be front of mind for many people as the costs of food, fuel and energy continues to rise and real wages continue to fall. Many aren’t sure how expensive their energy bills will be and are reluctant to spend money they may need in the future as a result.  

“There are also a lot of people who are struggling to keep up with their bills and credit card payments right now. This makes them vulnerable to financial shocks like a reduction in hours at work, job loss or sudden unexpected bills, and they are the people most likely to need an insolvency process if these shocks hit as they won’t have the savings to absorb them.”  

Looking at the figures in Scotland, 82 company insolvencies were registered in the country October 2022 – 22% higher than in 2021 and one percent higher than in 2019. This overall figure was made of 19 compulsory liquidations, 55 CVLs and eight administrations.  

As for Northern Ireland, 15 company insolvencies were registered in the country in October 2022 – which was seven percent higher than in October 2021 but 71% lower than in October 2019. This was comprised of 12 CVLs and three administrations.  

The country, meanwhile, saw 161 individuals take place – 58% higher than in October 2021 but 31% lower than in October 2019. This 161 figure consisted of 145 IVAs, 11 DROs and five bankruptcies.