Climbing insolvencies show little sign of economic recovery

“Today’s statistics show little sign of an economy in recovery. Company insolvencies are continuing to edge upwards as companies buckle under the pressure of a cost of living crisis, increasing interest rates and energy costs still at a high level. The number of company voluntary liquidations (CVLs) is perhaps the most stark manifestation of economic headwinds, with a 13% increase on last year and a huge 59% increase on pre-pandemic levels.

“We have also seen a dramatic increase in compulsory liquidations, which have doubled in number since February of last year. However, notably, this is 32% lower than February 2020, showing that even with the restrictions on winding up now lifted, compulsory liquidations are still below pre-pandemic levels. This could be reflected in the high numbers of CVLs, demonstrating that companies have sought to take positive action to enter liquidation rather than waiting for hostile creditors to force their hand.

“All, however, is not doom and gloom and slowing inflation could be the light at the end of the tunnel for companies struggling to make it through the winter months.”

Lucy Trott, senior knowledge lawyer and insolvency expert at Stevens & Bolton