Corporate insolvencies rise 5.5% in August 2022

Corporate insolvencies rose 5.5% in August on the previous month’s figures, according to the government’s latest statistics published on 16th September.

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales increased by 5.5% in August 2022 to a total of 1,933 compared to July’s total of 1,832. This is an increase of 43.4% compared to August 2021’s figure of 1,348. 

The number of registered company insolvencies in August 2022 was 43% higher than in the same month in the previous year (1,348 in August 2021) and 42% higher than the number registered three years previously (pre-pandemic; 1,365 in August 2019).

Of the 1,933 registered company insolvencies in August 2022 there were 1,662 CVLs, which is 33% higher than in August 2021 and 73% higher than in August 2019. 142 were compulsory liquidations, which is 274% (3.7 times) higher than August 2021, but 27% lower than August 2019. 13 were CVAs, which is 550% higher (6 and half times higher) than August 2021 but 57% lower than August 2019. There were 116 administrations, which is 111% (2.1 times) higher than August 2021 but 34% lower than August 2019 and there were no receivership appointments.

Christina Fitzgerald, President of the insolvency and restructuring trade body, R3, said:

 “The monthly increase in corporate insolvencies – to the third highest set of monthly statistics since January 2019 – has mainly been caused by an increase in the number of Creditors’ Voluntary Liquidations.

 “This suggests that directors remain concerned about their ability to continue to trade in the current climate, and are choosing to close their businesses before that choice is taken away from them.

“These figures will be a sobering reminder to government of the scale of the challenge facing the UK economy as we head into the winter months, and reflect the continued toll the sustained economic turbulence is taking on businesses in England and Wales.

“Companies are facing enormous running cost hikes just as household spending is facing its biggest squeeze in several decades which delivers yet another blow to business owners who were hoping to bounce back to normal trading levels post-pandemic.

“Many directors and managers are worried about the rise in prices and energy costs and the effect these will have on their margins and profits, and this is set to continue to be a concern.”

Personal insolvencies also rose in August, with 565 bankruptcies registered, up 10% on the previous year, but still below pre-pandemic levels. 7,340 IVAs were registered per month in the three-month period ending August 2022, along with 1,932 Debt Relief Orders, and 6,058 registrations to the government’s Breathing Space scheme to protect individuals from creditor action, highlighting the effect of the cost-of-living crisis on personal finances.