Corporate Finance

April insolvencies more than double that of 2021

There were 1,777 Creditors’ Voluntary Liquidations (CVLs), more than double the number in April 2021 and 74% higher than April 2019

The number of registered company insolvencies in April 2022 was 1,991 – more than double that during the same month last year.

The figure, released by the Office of National Statistics (ONS), is also 39% higher than the number registered three years previously (pre-pandemic; 1,429 in April 2019). However, this does mark a decrease on the 2,114 registered company insolvencies in March 2022.

In April 2022 there were 1,777 Creditors’ Voluntary Liquidations (CVLs), more than double the number in April 2021 and 74% higher than April 2019. Numbers for other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic, although there were three times as many compulsory liquidations in April 2022 compared to April 2021, and the number of administrations was 51% higher than a year ago.

For individuals, 530 bankruptcies were registered, which was 36% lower than in April 2021 and 64% lower than April 2019.

In addition, there were 1,708 Debt Relief Orders (DROs) in April 2022, which was 20% higher than in April 2021 and 29% lower than the pre-pandemic comparison month (April 2019). This increase is linked to changes to the eligibility criteria 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.

Simon Monks, Restructuring & Insolvency (R&I) director at Azets, said: “Although the insolvency statistics for April 2022 show a slight decrease in corporate insolvencies compared with March 2022, the significant upward trend remains.

“Whilst the material increase on this time last year is understandable, due to Government support available at that time, it is alarming that there is also a material increase on pre-pandemic levels.This suggests a realignment of economic resource and a clearing out of entities that are no longer economically viable, that might have been able to survive the pandemic due to support schemes.”

He added: “The notable increase in Creditors’ Voluntary Liquidation (CVLs) demonstrates that directors and other stakeholders are beginning to act to address corporate financial woes.Whilst the number of compulsory liquidations remains broadly flat, our expectation is that these will increase as Government and other creditor stakeholders assess support lines and look to recover where this makes financial and economic sense.

“We would expect the upward trend in corporate insolvencies to continue as the economy gradually returns to a business-as-usual state. But this should not necessarily be looked upon as a bad thing given the continued availability of capital, which can be utilised to put such resource to better use.”

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