Data published today by the Insolvency Service confirms that the number of registered company insolvencies for the quarter ending December 2022 was 5,995. This was 30% higher than in the same quarter in the previous year. This brought registered corporate insolvencies for the whole of 2022 to 22,109, an increase of 57% compared with 2021.
Lynne Blakey, a Director in the Advisory Consulting team at Evelyn Partners and a member of the Institute for Turnaround comments:
“The year-on-year rise in quarterly insolvency statistics is set in a period of rapidly increasing costs, significant wage pressure, high levels of political and economic instability and escalating interest rates as the Bank of England try and stem inflation.
“This comes after the backdrop of Covid restrictions and the associated impact on the economy. Businesses have emerged post covid significantly more economically vulnerable; having eaten through their cash reserves just to survive and often saddled with increased liabilities in the form of covid loans or HMRC arrears. Government support has ended and these liabilities now require to be repaid. Indeed, the figures out today show a year-in-year rise in compulsory liquidations of 356%, driven in part by increased HMRC petitions and bank action to recover outstanding Covid loans.
“Businesses within the consumer space including retail, hospitality and leisure, also face the impact of declining consumer confidence due to the squeeze in living standards coupled with reduced footfall resulting from recent industrial action around the country.
“In short, businesses are suffering. We are meeting with increasing numbers of directors and business owners who are struggling to deal with these increasing pressures. Whilst some are proactively seeking advice and help at an early stage, unfortunately many are still leaving it too late, with deteriorating performance and impending repayment deadlines limiting options available.
“With interest rates set to rise further this week, placing more pressure on debt burdened businesses and consumers alike, it is important that directors seek help at an early stage to help protect shareholder value and preserve jobs.”
