England and Wales recorded 1,560 registered insolvencies in January 2022 – more than double the 758 registered in January 2021.
The latest figure is on par with the 1,508 number insolvencies in January 2020, as fears over a ‘perfect insolvency storm’ gather pace.
January 2022 saw 1,358 Creditors’ Voluntary Liquidations (CVLs) take place – also more than double the number in January 2021 and 34% higher than January 2020.
The number of CVLs is similar to the figures reported in December 2021.
Uncertain business climate taking its toll
Christina Fitzgerald, vice president of the insolvency trade body, R3, said this suggests company directors are “continuing to choose to close their businesses” rather than attempting to carry on trading.
She said: “The figures highlight the toll the current business climate is taking on firms in England and Wales. Over the last two months, businesses have had to trade through a perfect storm of issues which will have affected them and their income.
“They’ve battled a myriad of factors including new Covid measures, a slowdown in consumer spending, and rising inflation, with steep increases in energy prices a particular pinch-point.
“After nearly two years of trading through a pandemic, these factors may increasingly become too difficult for many directors to deal with.
“Against a backdrop of continued pandemic-related uncertainty, there is likely to be a significant number of directors who will be increasingly doubtful that their business can survive much longer.”
Rising costs across the board hitting businesses hard
Some 118 compulsory liquidations took place in January 2022 – 131% higher than in January 2021, but 60% lower than January 2020. And 13 company voluntary arrangements (CVAs) took place in January 2022 – 38% lower than January 2021 and 59% lower than January 2020.
There were 71 administrations, which was 3% lower than January 2021 and 58% lower than January 2020.
When it comes to individual insolvencies, 1,873 debt relief orders (DROs) and 575 bankruptcies took place in January 2022.
The number of DROs was 59% higher than in January 2021, but 15% lower than in January 2020. Bankruptcies, meanwhile, were 32% lower than in January 2021 and 63% lower than in January 2020.
Summing up, Fitzgerald said: “People are worried about how rising costs across the board will affect them, particularly energy prices, so it’s no wonder that people are worrying more about money.”