On 17th May 2022 the Insolvency Service released their monthly Insolvency Statistics for April 2022.
The number of company insolvencies in April 2022 was 1,991, which is more than double the number registered in April 2021 of 925. This is also 39% higher than the figures for pre pandemic April 2019 of 1,429.
Of this 1,991 there were 1,777 Creditors Voluntary Liquidations (CVL’s) – more than double in April 2021 and 74% higher than April 2019. A breakdown is as below:
- There were 1,777 CVLs, which is 118% (2.2 times) higher than in April 2021 and 74% higher than in April 2019;
- 91 were compulsory liquidations, which is 203% (3 times) higher than April 2021, but 61% lower than April 2019;
- 10 were CVAs, which is double the amount in April 2021 but 62% lower than April 2019;
- There were 113 administrations, which is 51% higher than April 2021 but 22% lower than April 2019
These statistics represent the number of creditors’ voluntary liquidations (CVLs), administrations, company voluntary arrangements (CVAs) based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates, which could be anywhere up to two months prior to the date.
There were 530 Bankruptcies in April 2022, which was 36% lower than April 2021 and 64% lower than April 2019.
1,708 Debt Relief Orders were made in April 2022, which is 20% higher than April 2021 and 29% lower than April 2019. This is thought to be linked to the changes to eligibility criteria on 29th June 2021 raising the level of debt from £20,000 to £30,000.
IVA’s, which the figures are not clear for as these need to be registered at the register held by The Insolvency Service, totalling 7,516 were registered per month in the three month period ending April 2022. This is 10% higher than the 2021 figures and 22% higher than April 2019.
The increases seen in the above figures are attributed to:
- Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).
- Enhanced government financial support for companies and individuals.
On 30th September 2021 some of the temporary measures were ended or replaced by tapered measures, meaning that creditors were now able to take action to recover their debt from this date.
In practice the Bounce Back Loan schemes offered by banks and underwritten by the government have played a large part in the increase of CVL’s as companies had the benefit of a 12 month payment break and could also extend the terms.
At DCA we are seeing a large number of company directors who have obtained these loans and have used them to support trade, however when lockdown provisions ended the business was not able to return to pre pandemic levels.
Directors are urged to seek professional advice at the earliest opportunity to provide themselves the best possible chance of rescuing the company or limit the liabilities incurred once insolvent.
DCA can be contacted on 01702 344558 or via email at firstname.lastname@example.org for Insolvency advice