13 July 2022: As we are now half way through the year, it is reported that the number of corporate insolvencies are higher compared to those in the second quarter of 2021. The number of corporate insolvencies were roughly similar in the first quarter when comparing 2021 and 2022. However, Government statistics show that there is a significant increase in corporate insolvencies in April 2022 compared with April 2021.
|April 2021||April 2022|
|Creditors Voluntary Liquidation||819||1,777|
|Company Voluntary Arrangements||5||10|
In May 2021, 1,011 companies formally entered an insolvency procedure; however, that number rose by almost 80% in May 2022, with 1,817 companies entering insolvency.
|May 2021||May 2022|
|Creditors Voluntary Liquidation||930||1,584|
|Company Voluntary Arrangements||6||14|
Previously, Government support schemes were in place to help companies stay afloat. For example, research carried out by the House of Commons have shown that a total of £70 billion was claimed under the Coronavirus Job Retention scheme for claims up to November 2021. However, as these support schemes are now closed and with increases in inflation and energy costs hitting firms, there is growing pressure on companies. Furthermore, the removal of temporary restrictions on presenting winding-up petitions from 1 March 2020 could be another relevant factor.
During the pandemic, the Government had placed temporary restrictions on creditors regarding presenting winding-up petitions against companies that had suffered financial loss from the pandemic. The restriction was later amended so that the claimant was required to seek a repayment plan within 21 days (from date of service) and the petitioned debt had to be £10,000 or more.
The removal of this restriction on 1 April 2022 means that creditors, will, as before, be able to present winding-up petitions against companies for debts of £750 or more. There is no longer any mandatory requirement to seek repayment proposals from debtors.
Although the figures for insolvency for June have not yet been disclosed, it is likely that the trend will remain. If you feel as though you have felt a growing pressure on your business and you think you would benefit from advice from BRI, please contact one our helpful management team for a free initial consultation with no obligation. We will always assist where we can regardless of the outcome for us.