ANNUAL FIGURES: Southern and Thames Valley R3 chairman Garry Lee
Corporate insolvencies hit a 13 year high in 2022 as the ‘dam burst’ following the Covid pandemic.
R3, the trade body for restructuring and insolvency professionals in the South and Thames Valley, said that the tsunami came after insolvencies were supressed by Government support programmes for two years.
Its analysis of the latest statistics for England and Wales showed that there were 22,109 underlying corporate insolvencies in 2022 – the highest since the figure of 24,035 in 2009.
The 2022 figure was more than 50 per cent up on 2021 and 75% up on 2020. It also included the highest number of Creditors’ Voluntary Liquidations in 62 years as more directors appear to have ‘run out of road’ and closed their businesses down rather than struggle on.
The figures from The Insolvency Service showed that
- There were 22,109 underlying corporate insolvencies in 2022. This was an increase of 57.3% from 2021’s figure of 14,059, an increase of 75% on 2020’s figure of 12,632, and an increase of 28.8% on 2019’s figure (17,164).
- There were 118,851 seasonally adjusted personal insolvencies in 2022 – an increase of 8% on 2021’s figure of 110,044, rise of 6.5% on 2020’s figure (111,571) and a fall of 2.2% compared to pre-pandemic levels in 2019 (122,148).
Garry Lee, chair of insolvency and restructuring trade body R3’s Southern and Thames Valley region, said: “2022 was the year the insolvency dam burst.
“After two years of being supressed by Government support programmes, corporate insolvency numbers hit a 13-year high last year.
“This was mainly due to Creditors’ Voluntary Liquidations reaching their highest level in 62 years, 18,822, as more and more directors turned to this process to close down their businesses.
“After nearly three years of trading through a pandemic, and in the face of the end of Government support, rising costs and a cost-of-living crisis, many directors simply ran out of road this year and chose to close their businesses before the choice was taken away from them.
“Alongside this, the end of the Government’s temporary legislation on winding-up orders has left creditors free to pursue unpaid debts, which is why Compulsory Liquidation numbers are at their highest in three years.
“With the entire supply chain under pressure from increased costs, the flexibility we saw from creditors during and in the aftermath of the pandemic to those who owed them money has disappeared, and many are now taking action to recover the debts they are owed in an attempt to balance their own books.”
Garry, who is an associate director in the recovery and restructuring services department at professional services group Evelyn Partners’ Southampton office, added: “Inflation is still high, supply chains are still squeezed, and people are still worried about the cost of living.
“So, it’s likely we’ll see insolvencies continue to rise this year unless the trading climate takes a drastic turn for the better.
“We urge directors in the South and Thames Valley to be aware of the signs their business is financially distressed and act as soon as they see them.
“Rising stock, problems paying staff or suppliers and cashflow issues are all signs a business is struggling.
“Seeking advice from a qualified and regulated source as soon as issues show themselves gives directors more options, more time to make a decision and a better outcome than if they’d waited till the situation became more severe.”
Personal insolvencies reached their highest numbers for three years in 2022 as a result of more people turning to Individual Voluntary Arrangements and Debt Relief Orders.
However, bankruptcy numbers were at a 10-year low, suggesting that more people were seeking and agreeing arrangements with their creditors earlier.
ENDS
