Company insolvencies see 40% year-on-year increase

This 1,691 figure was predominantly driven by the 1,456 creditors’ voluntary liquidations (CVLs) that took place, with it being 30% higher than in June 2021 and 44% higher than in June 2019. 

Numbers for other types of company insolvencies, however, remained lower than before the pandemic. 

Broken down, 136 compulsory liquidations took place in June 2022 - which was 258% higher than June 2021, but 51% lower than in June 2019. In addition to this, 90 administrations, eight company voluntary arrangements and one receivership appointment took place - all of which were higher year-on-year but lower than the pre-pandemic figure in June 2019.  

Overall month-on-month company insolvencies did however decrease by 7.2% between May and June 2022. Commenting on this, R3’s vice president Nicky Fisher said: “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.” 

As for individual insolvencies in England and Wales, 1,815 debt relief orders (DROs) and 471 bankruptcies took place in June 2022. 

Of the bankruptcies, 401 were debtor applications and 70 were creditor petitions. Year-on-year, bankruptcies were 37% lower than in June 2021, with debtor applications being 38% lower and creditor petitions 33% lower. 

When compared to June 2019, total bankruptcies were 64% lower, with debtor applications 61% lower and creditor petitions 74% lower. 

Year-on-year DROs increased by 28% between June 2021 and June 2022 - but were 14% lower than in June 2019. 

As for individual voluntary arrangements (IVAs), there were 7,575 registered per month in the three-month period ending in June 2022 - six percent higher than that same period in 2021 and 17% higher than in June 2019. 

Fisher says, despite the year-on-year falls in most personal insolvencies, “times are still tough” for people in England and Wales. 

She added: “We often talk about putting money away for a rainy day but with a rise in costs across the board from food to fuel and even rent, for many people that rainy day has arrived. And for some, it’s likely to appear soon.

“With wages struggling to keep up with inflation, a significant number of people simply have nothing left to spare from their pay packet once the bills have been paid. But we’re also seeing many people having to dip into their savings and use credit cards to pay for just the essentials, with some reducing their workplace pension contributions to provide some additional financial elbow room.

“While individuals across the board are feeling the effects of the rising cost of living, those on lower incomes are most severely affected and it is those people that are most vulnerable to becoming insolvent.” 

Looking at the figures for Scotland, 76 company insolvencies took place in June 2022 - equal to the number in June 2021 but 12% more than the pre-pandemic level in June 2019. 

This figure comprised 67 CVLs, eight compulsory liquidations and one administration - there were, however, no CVAs or receivership appointments. 

In addition to this, between 26 June 2020 and 30 June 2022 no moratoriums were obtained, with two companies having a restructuring plan registered at Companies House in Scotland. 

Turning to Northern Ireland, 26 company insolvencies were registered in the country, 2.4 times as many as in June 2021 - but 10% lower than June 2019. This was composed of 12 CVLs, 11 compulsory liquidations, two CVAs and one administration, with there being no receivership appointments. 

As for individual insolvencies, 134 took place in June 2022 - 18% lower than in June 2021 and 30% lower than in June 2019. This consisted of 101 IVAs, 17 DROs and 16 bankruptcies.

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