UK Business Insolvency rises by nearly a third

0
812
uk business insolvency rises by a third

UK Business Insolvency rises by nearly a third

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales were 32% higher than in the same month in the previous year (1,489 in December 2021) and 75.5% higher than December 2019 (1,119).

UK Business insolvency fell 3.25% in December 2022 to a total of 1,964 compared to November’s total of 2,029. They were 31.9% higher than in December 2021 (1,489) and 75.5% higher than December 2019 (1,119)

In December 2022, there were 1,659 Creditors’ Voluntary Liquidations (CVLs), 22% higher than in December 2021 and more than twice as many as December 2019 (pre-pandemic). Numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic but were higher than in December 2021, whilst compulsory liquidations in the month were more than three and a half times as many as in December 2021.

HMRC debt collection action

The increase in HMRC winding-up petitions has been named as the cause behind the increase in Uk Business insolvency.

There were 183 compulsory liquidations in December 2022, more than three and a half times as many as in December 2021 and 8% higher than in December 2019. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus (Covid-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.

Of the 1,964 registered company insolvencies in December 2022 there were 1,659 CVLs, which is 22% higher than in December 2021 and 111% (2.1 times) higher than in December 2019, 183 were compulsory liquidations, which is 259% (3.6 times) higher than December 2021 and 8% higher than December 2019. 10 were CVAs, which is 43% higher than December 2021 but 52% lower than December 2019. There were 112 administrations, which is 56% higher than December 2021 but 20% lower than December 2019; There were no receivership appointments.

Fall in UK corporate insolvencies

Commenting on the Uk Business insolvency figures Christina Fitzgerald, President of R3 said “The monthly fall in corporate insolvencies is driven by a fall in Compulsory Liquidation and Administration numbers. However, UK corporate insolvencies have increased compared to last year and three years ago due to an increase in Creditor Voluntary Liquidation and Compulsory Liquidation numbers.”

“This is due to a combination of directors choosing to close their businesses and creditors chasing unpaid debts due to changes in legislation as both ends of the supply chain remain squeezed by ongoing issues around consumer confidence, rising costs, and requests for increased wages.”

“December and January are critical periods for many firms, and these issues, combined with strikes, bad weather and the economic challenges the UK has faced over the last three years may have dealt a further blow to businesses and business owners.”

“These challenges aren’t going to go away overnight – and directors are very concerned about the effects of energy and staff costs, as well as fears about how the cost of living crisis will impact on their income this year.”

Gareth Harris, Partner at RSM UK Restructuring Advisory, said ‘In December 2022 company insolvencies have remained very high in historic terms, continuing to be driven by shut down liquidations (CVLs) of smaller companies and HMRC compulsory liquidations.”

‘However, this is, in reality, just the “excess insolvencies” that were suppressed during the pandemic and the times of unprecedented government support.  What we are yet to really see is an increase in those good, slightly larger companies who are now struggling due to the toxic combination of accumulated debt, high interest rates, inflation, labour shortages and supply chain issues.”

“‘Whilst these companies are struggling it will take a few months yet before they are reflected in the insolvency/administration figures, but sadly it now seems inevitable that many will have to go through that process to restructure.”

Mark Supperstone Managing Partner at Resolve said “The ONS figures today follow the trend we have seen over the past few months with insolvencies at a heightened level compared to 2021. It can be hard to see a positive path ahead for SMEs, however, there is a glimmer of hope in these figures as insolvency numbers are broadly flat on a month-on-month basis (1,964 in December 2022 versus 2,029 in November 2022). With cost pressures potentially starting to ease, the year ahead could be brighter than many are predicting.”

Hire a Debt Collection Agency

Small Businesses are urged to consider utilizing debt collection services if they’re owed money. Instances of UK Business insolvency is rapidly rising. It is well known that unpaid business invoices are the silent killer of thousands of SME’s every year that could be saved by taking action.

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.