Home Business March 2022 insolvency statistics – Bleak outlook for companies as true impact of pandemic hits, whilst cost of living crisis continues rise in personal insolvencies

March 2022 insolvency statistics – Bleak outlook for companies as true impact of pandemic hits, whilst cost of living crisis continues rise in personal insolvencies

by uma

 

Margaret Carter, Restructuring & Insolvency (R&I) Director, and Louise Brittain, R&I Partner at Azets, the UK’s largest regional accounting firm and specialist business advisor to SMEs, comment on the latest insolvency statistics for England and Wales:

Company insolvencies

Margaret Carter, R&I Director at Azets, said:

“Since the beginning of the global pandemic, the restructuring, insolvency and business advisory community has speculated there would be a resulting so-called ‘tsunami’ of corporate insolvencies. The true impact of the of the pandemic now appears to be coming to fruition, following an extended period of business grants and government backed lending propping up businesses. 

“The corporate insolvency statistics for March 2022 (2,114) reflect more than double the number from March 2021, and 34% higher than the number in March 2019 (pre-pandemic). The majority of the corporate insolvencies recorded are creditors voluntary liquidations, with an increase in administrations also apparent. These figures would support concerns raised since 2020 that the grants/lending would only serve to allow business owners to ‘kick the can down the road’ rather than ultimately rescuing the businesses. Whilst many businesses have recovered and are actively repaying their government backed loans, thousands of other companies now seem to be collapsing, perhaps triggering the beginning of the feared ‘tsunami’.

“What is even more concerning about the March 2022 figures is that the recent lifting of restrictions on winding up petitions (and other restrictions) has yet to take its toll. It is suspected that the number of compulsory liquidations will increase substantially over the coming months. There are also other factors such as increased fuel prices, import/export issues caused by Brexit or the war in Ukraine, and financial sanctions that continue to effect businesses in a variety of sectors.

“In conclusion, the March 2022 corporate insolvency figures are high, but predictions for the coming months paint a bleak picture.”

Individual insolvencies

Louise Brittain, R&I Partner at Azets, said:

“March 2022 saw a return to pre-pandemic levels of personal insolvency being driven by debtors seeking relief from increasing levels of debt. Bankruptcies, debt relief orders, and individual voluntary arrangements (IVAs) have all increased on last quarter’s numbers.

“March is always a busy month for IVAs and this quarter sees an increase of 20% on the last quarter. Debtor led bankruptcies and debt relief orders are up by 9% and 11% respectively. This is not surprising bearing in mind the huge increases in the cost of basic living requirements and the rise in National Insurance (NI). As households continue to struggle, we can expect these numbers to continue to rise.

“Living under the burden of debt has huge consequences on mental health and family life, and effective debt relief processes are one way of helping those individuals in need.”

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