Corporate Insolvencies 43% Higher than Same Time Last Year

Big increase in corporate insolvencies

The latest release from the Insolvency Service shows the number of registered company insolvencies in August 2022 was 1,933:

• 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).

In August 2022 there were 1,662 Creditors’ Voluntary Liquidations (CVLs), 33% higher than in August 2021 and 73% higher than August 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the coronavirus (COVID-19) pandemic, although there were almost four times as many compulsory liquidations in August 2022 as in August 2021, and the number of administrations was more than twice as high as a year ago.

Figure 1 shows the historical trend of company insolvencies covering the past three years.

Figure 1: The number of registered company insolvencies in August 2022 was higher than pre-pandemic levels, driven by a higher number of CVLs.

England and Wales, August 2019 to August 2022, Not seasonally adjusted

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency types)

Company insolvencies

This statistical release presents the numbers of CVLs, administrations, CVAs and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates. Compulsory liquidation data are sourced by the Insolvency Service and provide an accurate measure of the number of new cases in each month. Data for the latest month were extracted from a live system five working days after month end and therefore figures are provisional.

The number of company insolvencies was 42% higher than in August 2019 and 43% higher than the number in August 2021.

The increase in company insolvencies was driven by an increase in the number of CVLs, which were 73% higher than in August 2019 and also 33% higher than in August 2021. Other insolvency types were lower than in August 2019, although compulsory liquidation numbers were 3.7 times higher and administrations were 2.1 times higher as the number in August 2021.

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.

The worst could be yet to come

Rick Smith, Managing Director of Forbes Burton said:

“This massive increase in the number of corporate insolvencies is mainly caused by the huge rise in Creditors Voluntary Liquidations, this shows that many company directors are really concerned about their ability of their companies to continue trading and are choosing to close voluntarily before they are forced into it.

“The figures show the scale of the challenge the UK is facing right now with the cost of living crisis and the economy. As we head in to winter the surging cost of energy could well see even more businesses having to close their doors with the worst may be yet to come.

“If you know your business is in, or could get into, trouble this winter seek advice as soon as possible, the earlier you do the more options there are.”

Contains public sector information licensed under the Open Government Licence v3.0.

Full reading can be found at https://www.gov.uk/government/statistics/monthly-insolvency-statistics-august-2022/commentary-monthly-insolvency-statistics-august-2022–2