Company insolvencies 39% higher than pre-pandemic

This is more than double the 925 number registered in the same month in 2021 and is 39% higher than the 1,429 registered in 2019. They did, however, decrease by six percent when compared to March’s total of 2,119. 

Of the 1,991 figure, there were 1,777 credit voluntary liquidations (CVLs) - which is 118% higher than April 2021 and 74% higher than April 2019. Alongside the overall company insolvencies, CVLs have gone down when compared to March. 

There were 91 compulsory liquidations - 203% higher than the same time last year, but 61% lower than in April 2019. As for creditor voluntary agreements (CVAs), there were ten - which is double the amount in April 2021 but 62% lower than April 2019. 

Commenting on the year-on-year increase in company insolvencies, R3 president Christina Fitzgerald, said: “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.

“This highlights the role the government’s support initiatives played in preventing the economic damage of the pandemic from translating into an increase in corporate insolvencies. 

“It also 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 published today [17 May] 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.

“Businesses are trying to trade amidst rising inflation, a contracting economy and consumer confidence at a near historic low – lower than during the peak of the pandemic – due to cost-of-living concerns. 

“Alongside this, rising fuel and energy costs and demands for increased wages from employees mean that it’s a challenge simply to break even at the moment, especially for those businesses who are still reeling from the pandemic.” 

Turning to individual insolvencies, 1,708 debt relief orders (DROs) took place in England and Wales in April 2022. This number of DROs was 20% higher than April 2021, but 29% lower than in April 2019. 

Meanwhile, 530 bankruptcies took place in the month. They were made up of 443 debt applications and 87 creditor petitions. 

Monthly bankruptcy numbers between July 2021 and April 2022 were lower than the numbers in 2020 - which were already lower than pre-pandemic levels. Bankruptcies were 36% lower than April 2021. 

Debtor applications were 40% lower but creditor petitions were at a similar level to April 2021. Compared to April 2019, total bankruptcies were 64% lower, debtor applications were 63% lower and creditors’ petitions were 71% lower. 

Commenting on these figures, Fitzgerald said: “These figures can’t hide the fact that many people’s finances in England and Wales are stretched to breaking point at the moment. The cost of fuel, food and energy has risen, while wages and take home pay have failed to keep pace with rising costs.

“People are worried about their financial futures, their ability to manage their money, and the future of the economy. As a result, they are reluctant to spend on anything other than the essentials and are turning to borrowing to cover the gap between wages and inflation. 

“In times like this financial shocks – job loss, a reduction in hours at work, or even an unexpected bill – can result in people quickly moving from struggling to becoming insolvent.” 

In Scotland, 92 company insolvencies took place. This was 142% higher than April 2021 but 10% lower than in April 2019. 

The 92 comprised 73 CVLs, 17 compulsory liquidations, one administration and one CVA. Traditionally, the overall volume of company insolvencies were driven by compulsory liquidations - however since April 2020 there’ve been nearly three times as many CVLs as compulsory liquidations. 

In Northern Ireland, there were 13 company insolvencies in April 2022 - 2.6 times as many as in April 2021, but 32% lower than April 2019. 

The 13 comprised six compulsory liquidations, four CVLs, two administrations and one CVA. 

When it comes to individual insolvencies, 162 took place in Northern Ireland - 28% lower than in April 2021 and 51% lower than April 2019. This consisted of 144 individual voluntary arrangements, 14 DROs and four bankruptcies.