Insolvency stats reveal stark 52% rise in compulsory liquidations

“Today’s statistics reveal a stark reality that insolvencies are continuing to climb in the face of record levels inflation, increasing interest rates and an ongoing cost-of-living crisis, which is pushing businesses to breaking point. The situation is exacerbated by the lack of any new Government support for businesses, which are particularly affected by the steep rise in energy costs.

“The drastic 52% increase in compulsory liquidations compared to January 2022 demonstrates that the current macroeconomic climate is taking its toll and creditor pressure is rapidly escalating. The double bind of HMRC clamping down on historic non-payment of debts, and banks gearing up to pursue fraudulently claimed bounce back loans, means this trend is only set to continue.

“However, the rapid increase in compulsory liquidations is not wholly surprising. Until the end of March 2022, there were still wide-ranging restrictions on winding up petitions and the rent arbitration scheme for pandemic-related rent arrears remained in place until the end of September. This sudden wave of winding up orders is likely a result of the restriction on petitions being lifted and a flood of historic creditor claims now being pursued. Overall, the picture for CVLs (which had been rapidly increasing) looks steady and administrations remain lower than January 2020, so there is hope yet that many businesses will weather the storm.”

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