Company insolvencies rise 21% in November

The number of registered company insolvencies increased by 21% in November 2022 to 2,029, according to the latest figures from the Insolvency Service.

This is compared with 1,676 in November 2021 and is also 35% higher than the number registered three years previously (pre-pandemic; 1,505 in November 2019).

It also found there were 290 compulsory liquidations in November 2022, more than five times as many as in November 2021 and 7% higher than in November 2019.

Numbers of compulsory liquidations have increased from “historical lows” seen during the coronavirus (COVID-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.

In October and November the numbers of compulsory liquidations were higher than the pre-pandemic comparison months, due to 95 petitions from a single bank.

In November 2022 there were 1,595 Creditors’ Voluntary Liquidations (CVLs), 5% higher than in November 2021 and 50% higher than November 2019. Numbers of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic.

Commenting on the figures, Andy Davis, Strategic Advice director – R&I at Azets, said: “These latest insolvency statistics for November continue the trend over the last three years and evidence a significant increase in the volume of companies feeling financial stress. This increase is largely being driven by higher Creditors’ Voluntary Liquidations (CVLs) and compulsory liquidations.

“We are already seeing an uptick in the number of companies facing financial pressure, as the obvious impacts of inflation, interest rates, input costs, plus Brexit continue to bite. It is also much harder for firms to build reliable forecasts at this stage, given the current economic and macro uncertainties, this in turn makes raising additional liquidity or capital more challenging.”

He added: “In my experience, a company that recognises the need for advice and support at an early stage will have a wider range of options available to it and a much better prospect of avoiding insolvency, versus those that bury their heads in the sand. Directors should seek advice from an appropriate restructuring and insolvency practitioner, to help them better understand these options in order to save some or all of the business. Waiting until there is a liquidity crunch is just too late.”