79% increase in company insolvencies in May

This was also 34% higher than the 1,352 registered before the pandemic in May 2019. 

Of the 1,817 figure, the majority - 1,584 - came from creditors’ voluntary liquidations (CVLs) - which was 70% higher than May 2021 and 66% higher than 2019. The numbers for other types of company insolvencies - such as compulsory liquidations - however remained lower than before the pandemic. 

Having said this, there was a 297% increase in compulsory liquidations in May 2022 when compared to May 2021 - although this was 50% lower than May 2019. The number of administrations went up by 95% year-on-year, but this was 12% lower than in May 2019. 

There were 14 company voluntary arrangements (CVAs) - which was more than double the amount in May 2021 but 55% lower than May 2019. 

Month-on-month, company insolvencies decreased by 8.9% from April’s total of 1,995. Commenting on this, R3’s president Christina Fitzgerald said the figures suggest that  “while the current economic challenges are continuing to hit businesses hard”, insolvency trends are still uneven. 

She added: “In recent months, firms have been buffeted by rising costs, falling consumer confidence and reluctance to spend on anything other than the essentials, which has meant they haven’t made the additional income they need to offset increased expenditure. 

“There simply hasn’t been time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle - and rising interest rates will add extra costs for firms to deal with.” 

As for individual insolvencies, 2,030 debt relief orders (DROs) and 566 bankruptcies took place in May 2022 in England and Wales. The bankruptcies were made up of 497 debtor applications and 69 creditor petitions. 

Monthly bankruptcy numbers between July 2021 and May 2022 were lower than the numbers in 2020, which were already lower than pre-pandemic levels. 

Bankruptcies were also 23% lower than in May 2021, with there also being a 23% drop in debtor applications. Creditor petitions were 19% lower than May 2021. 

Compared to 2019, total bankruptcies were 61% lower, debtor applications 57% lower and creditor petitions 77% lower. 

The number of DROs, however, was 33% higher than in May 2021 but 11% lower than in May 2019. 

Overall month-on-month personal insolvencies - according to R3 - increased by 11.2% to 10,476 in May 2022 compared to 9,417 in April and increased by 23.3% to May 2021’s figure of 8,496. 

Commenting on this, Fitzgerald said it “suggests that while the economic challenges the UK is facing are taking a toll on individuals, that impact is largely being felt by those on lower incomes given there has only been a slight increase in the number of people entering a bankruptcy process”. 

She added: “Overall personal insolvencies are higher this month than in May 2021, but lower than in 2020 and slightly lower than in 2019.

“However, the situation is still tough for people’s personal finances. While unemployment is low and job vacancies are high, wages haven’t kept pace with inflation, and many people remain very worried about how they’ll manage to afford food, fuel and energy as all three of these necessities become increasingly expensive.

“People’s finances have been affected by the economic fallout from the pandemic, and combined with the increased cost of living, there are potentially a lot of people who are vulnerable to the kind of unexpected shocks that can lead to them becoming insolvent.” 

In Scotland, 93 company insolvencies were registered in May 2022 - which was 82% higher than in May 2021 and 19% than in May 2019. The 93 figure was made up of 68 CVLs, 19 compulsory liquidations and six administrations. 

Traditionally, the volume of company insolvencies has been driven by compulsory liquidations in the country - however since April 2020 there have been more than three times as many CVLs as compulsory liquidations. 

Between 26 June 2020 and 31 May 2022, no moratoriums took place in Scotland and two companies had a restructuring plan registered at Companies House. 

In Northern Ireland, 20 company insolvencies took place in May 2022 - 2.6 times as many as in May 2021, but 50% lower than May 2019. This 20 figure comprised 17 CVLs and three compulsory liquidations. 

When it comes to individual insolvencies, Northern Ireland saw 144 take place in May 2022 - which was 26% more than in May 2021 and 39% more than May 2019. This 144 figure consisted of 128 individual voluntary arrangements, eight DROs and eight bankruptcies.