21% increase in company insolvencies

This is 21% more than the 1,676 recorded during the same month in 2021 and 35% higher than the 1,505 seen in November 2019.  

Of the 2,029 figure, 1,595 were creditors’ voluntary liquidations (CVLs) – five percent higher than in November 2021 and 50% higher than in November 2019. Meanwhile 290 compulsory liquidations took place – 437% higher than during the same period last year, and seven percent higher than in November 2019.  

In addition to this, 134 administrations and ten company voluntary arrangements (CVAs) took place, both of which were higher than November last year – 44% and 52% respectively – but lower than in 2019 – down 11% and 52% respectively.  

Alongside this, between 26 June 2020 and 30 November 2022 40 moratoriums were obtained in England and Wales, and 12 companies had a restructuring plan registered at Companies House. 

Responding to this, Evelyn Partners’ head of advisory consulting Claire Burden said: “The year-on-year rise in the number of monthly company insolvencies can be attributed to businesses struggling to deal with post Covid debts, rising interest rates and inflationary increases failing to be passed onto already cost-wary consumers.  

“We are seeing an increasing number of worried directors who are struggling to keep their businesses afloat. These are good companies but facing serious and continuing increases in energy costs, wage demands and interest rates. The vast majority of directors have never before faced these levels of inflation and are having to change their ways of working to assert more control.” 

R3 president Christina Fitzgerald added: “What we’re seeing here is a perfect storm of creditors pursuing unpaid debts and directors choosing to close down their businesses – either before this choice is taken away from them or because they have simply run out of road.  

“An increasing number of businesses are buckling under the strain of more than two and half years of economic turmoil. Companies have been battered by the pandemic, rising costs, reduced spending and increasing inflation, and a growing number are now turning to an insolvency process to resolve their financial distress.    

“For many businesses, the Christmas and post-Christmas period is a critical part of their year and the time when a large percentage.” 

Sarah Rayment – a managing director at Kroll – added: “The question is whether this will translate into a return to ‘normal’ levels in 2023. There continues to be economic headwinds alongside weak consumer confidence, which will place pressure on retail and hospitality in particular.  

“We are also seeing an increase in winding up petitions from HMRC, who have regained preferential status as a creditor. However, we are also seeing a lot of companies coming to us a lot earlier to understand how we can support them to turnaround their business. Companies hate uncertainty but many are getting ahead of the curve to restructure now.” 

Turning to personal insolvencies, 2,269 debt relief orders (DROs) and 546 bankruptcies took place in England and Wales in November 2022.  

Looking at the bankruptcies, this was made up of 445 debtor applications and 101 creditor petitions.  

Overall, bankruptcies were 16% lower than in November 2021 – with debtor applications 19% lower, however creditor petitions were two percent higher. In addition to this, total bankruptcies were 60% lower than compared to November 2019, with debtor applications 61% lower and creditor petitions 56% lower.  

As for DROs, the number took place in November 2022 was ten percent higher than compared to the same month the last year but four percent lower than in November 2019. This increase followed an eligibility change in June 2021, and for the past year have been slightly lower than pre-pandemic levels.  

Additionally, there were – on average – 7,801 individual voluntary arrangements (IVAs) registered a month in the three months ending in November 2022. This is 11% higher than for the three-month period ending in November 2021 and 14% higher during the same period in 2019.  

Reflecting on this, Fitzgerald said: “There’s no doubt that rising costs and economic turbulence are taking their toll on personal finances. People are having to pay more to put food on the table, heat their homes and fuel their cars, and have little room to spend on anything other than the basics.  

“An increasing number are worried about money, with the cost of living and the price of energy their biggest concerns, and more people are turning to credit to pay for their day-to-day expenses.  

“Using credit as a solution can become a problem if people find themselves unable to pay their debts back or have to keep borrowing, and the amount they owe becomes unmanageable.” 

Looking at figures in Scotland, in November 2022 118 company insolvencies were registered in the country – 13% higher than the number in November 2021 and 36% higher than in November 2019. Of this, 42 were compulsory liquidations, 72 CVLs, three were administrations and one was a CVA.  

The number of CVLs bucks the historical trend in the country, as the volume of company insolvencies were traditionally mostly driven by compulsory liquidations – however since April 2020, there have been nearly three times as many CVLs as compulsory liquidations.  

Turning to Northern Ireland, there were 20 company insolvencies registered in the country – more than double the number in November 2021, but 35% lower than in November 2019. This was comprised of 16 CVLs, two compulsory liquidations and two CVAs.  

As for personal insolvencies, 146 took place in the country – 24% lower than in November 2021 and 48% lower than in November 2019. This consisted of 134 IVAs, nine DROs and three bankruptcies.