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Latest insolvency data

ended 28. April 2022

The official company insolvency data and individual insolvency data for Q1 2022 has just been published and it isn't great. Key points are below. Please share your thoughts ASAP. We will be issuing your thoughts on this to the media at 10:30am.

  • Between 1 January and 31 March 2022 (Q1 2022), there were 4,896 (seasonally adjusted) registered company insolvencies, as shown in Figure 1, comprising 4,274 creditors’ voluntary liquidations (CVLs), 331 compulsory liquidations, 266 administrations, and 25 company voluntary arrangements (CVAs). There were no receivership appointments.
  • After seasonal adjustment, the number of company insolvencies in Q1 2022 was 6% higher than in Q4 2021 and more than double the number (112% higher) in Q1 2021. The number of CVLs increased to the highest quarterly level since the start of the series in 1960. The number of compulsory liquidations also increased, but remained lower than levels seen before the coronavirus (COVID-19) pandemic.
  • One in 257 active companies (at a rate of 38.9 per 10,000 active companies) entered liquidation between 1 April 2021 and 31 March 2022. This was an increase from the 25.5 per 10,000 active companies that entered liquidation in the 12 months ending 31 March 2021.
  • After seasonal adjustment, the number of individual insolvencies in January to March (Q1) 2022 was 17% higher than in Q4 2021. Individual Voluntary Arrangement (IVA) and Debt Relief Order (DRO) numbers were higher, while bankruptcies were lower. Total individual insolvencies were 14% higher than in Q1 2021.
  • One in 416 adults (at a rate of 24.1 per 10,000 adults) entered insolvency between 1 April 2021 and 31 March 2022. This is an increase from the 23.5 per 10,000 adults who entered insolvency in the 12 months ending 31 March 2021.
  • During Q1 2022, there were 32,305 (seasonally adjusted) individual insolvencies, as shown in Figure 1, comprised of 23,997 IVAs, 6,629 DROs and 1,679 bankruptcies.
  • Between the launch of the Breathing Space scheme on 4 May 2021, and 31 March 2022, there were 58,463 registrations, comprised of 57,555 Standard breathing space registrations and 908 Mental Health breathing space registrations.

7 responses from the Newspage community

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Svend Pearce
Founder at Bficient
"While it's pleasing the pandemic appears to be under control, the debt accumulated by many companies to stay afloat is substantial. Much of the assistance came in the form of cheap loans with a grace period to commence repayment after 12 months. It's sadly now payback time and the pain many businesses are now experiencing is real. Bounce Back and CBILS loan repayments are proving a significant drain on companies' working capital. Restructuring any business is equally not without cash drains and so many directors will conclude that the battle is simply too great, future prospects too bleak and that further loans would simply be pouring fuel onto the fire. That the number of individual insolvencies is up is not surprising given the brutal economic conditions we're in. Amid the cost of living crisis, and after two years of the pandemic, household finances are under a phenomenal amount of pressure. For small business owners, household and business finance are intertwined and they are experiencing reduced sales at the exact same time that they need more money to cope with rising bills at home. We anticipate more individual insolvencies as we proceed through 2022."
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Marcus Wright
Managing Director at Bolton Business Finance
"The latest company insolvency data is extremely worrying. It's not just higher than the same quarter in 2021 but also higher than pre-Covid Q1 2020 figures. Businesses are really starting to feel the pressure, with many having barely recovered from Covid. Many businesses are out of the frying pan and into the fire, with inflation out of control, countless supply chain issues and energy at unsustainable prices, and that's evident in this data. A lot of businesses that were propped up by Government Covid grants and support are now running out of money and are having to call it a day. Expect the data to worsen, potentially materially, during the second quarter. For many businesses, the current headwinds are a bridge too far."
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Rachel Hayward
MD at Ask the Chameleon
Whilst the devil is always in the detail, I am not surprised at the data, but saddened to see many of my fellow business owners close their companies. The end of Government support, the catastrophic rise in energy, the continued worry about the high street plus the lack of skilled employees is knocking not only confidence, but the cold hard facts of the finance side of running a business. We are not magicians..if there is not enough custom/money, you can't pay your bills. There's only so much that you can do, and whilst some Companies may have hung on and survived Covid, the bounceback has fallen short for many.
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Jonathan Burridge
Founding Adviser at We Are Money
"Frankly, I am surprised the figure is not higher. I fear the future looks bleak for many small businesses as the number of negative factors continue to build up and make the fight harder. There will be winners but, for many who have battled through Brexit, Covid and now spiralling inflation they would be understandably asking when it is going to end and look to others to take the risk of business ownership."
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Graham Cox
Director at Bridging Hub
Now business Covid support has been withdrawn, company insolvencies have more than doubled the level seen in Q1 2021. Personal insolvencies are also higher than a year ago, though only by a comparatively modest 14%. These numbers don't lie. What's worrying is that the macro economic climate has got considerably worse in April, with the hikes in National Insurance, the energy price cap, and the sky-rocketing cost of living. With disposable income plummeting, you've got to fear for the restaurant trade in particular.
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Kevin Drew
Managing Director at Ascentant Accountancy
We are seeing supply chains collapse in some sectors with suppliers going bust due to increased logistic and transport costs, fuel increases and utility costs in addition to difficulty recruiting staff. That is trickling down to businesses who are struggling to get hold of stock and also dealing with late payment or non payment from squeezed end customers who are also feeling the pinch in their finances. In addition to the economic storm of increased haulage, fuel, utility and staffing costs, businesses have begun to repay BounceBack Loans, Recovery Loans and other Covid Support. Those businesses that have poor financial controls in place, don’t forecast cashflow, expenditure or revenue and don’t have their finger on the finance pulse within their business are suffering and will likely make up some of these insolvencies. As an Accountant, I can’t stress enough how important it is to be undertaking Management Accounts, KPI reporting and Cashflow forecasting, especially in the current climate.
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Legend
Dr Jackie Mulligan
Founder at ShopAppy
"The stories that lie behind this dire data are my biggest worry. For many small business owners, being forced to close is not just a commercial but a personal blow, and one that will impact their lives and that of their families for many years to come. There is simply not enough being done to counter the long-term impacts of Covid lockdowns and the onslaught of rising costs on small businesses. Small businesses are the bedrock of communities and our economy and more needs to be done to support them."