Insolvencies double in a year

According to the latest report, the number of company insolvencies in March 2022 was 34 per cent higher than in March 2019 and more than double the number in March 2021 (112 per cent higher).

The increase in company insolvencies was driven by an increase in the number of creditors’ voluntary liquidations, which were 62 per cent higher than in March 2019. Other insolvency types were lower than in March 2019, although compulsory liquidation numbers were almost four times higher and administrations were 74 per cent higher than the number in March 2021.

Of the 2,114 registered company insolvencies in March 2022:

• There were 1,844 CVLs, which is 109 per cent (2.1 times) higher than in March 2021 and 62 per cent higher than in March 2019.
• There were 131 compulsory liquidations, which is 297 per cent (3.97 times) higher than March 2021, but 45 per cent lower than March 2019.
• There were 10 company voluntary arrangements (CVAs), which is the same as March 2021 but 66 per cent lower than March 2019.
• There were 129 administrations, which is 74 per cent higher than March 2021, but 26 per cent lower than March 2019.

The report also revealed that between 26 June 2020 and 31 March 2022, in England and Wales, 36 moratoriums were obtained and 10 companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.

In regard to debt relief orders and bankruptcies, there were 2,512 DROs and 633 bankruptcies in March 2022 in England and Wales.

The number of DROs in March 2022 was 58 per cent higher than in March 2021, and 3 per cent higher than in March 2019. This is the first time since the start of the pandemic that numbers have been higher than the pre-pandemic comparison month. Changes to DRO eligibility came into effect on 29 June 2021, including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000. The increase in the number of DROs registered since June 2021 is likely to have been caused by this expansion of the eligibility criteria.

The bankruptcies were made up of 549 debtor applications and 84 creditor petitions. Monthly bankruptcy numbers between July 2021 and March 2022 were lower than the numbers in 2020, which were already lower than pre-pandemic levels.

Bankruptcies were 39 per cent lower than in March 2021. Debtor applications were 41 per cent lower and creditor petitions were 20 per cent lower than in March 2021.

Compared to March 2019, total bankruptcies were 59 per cent lower; debtor applications were 57 per cent lower and creditor petitions were 69 per cent lower.