Insolvencies in England and Wales 21% higher than last year

The number of registered businesses in England and Wales going bankrupt was 21 percent higher in November than a year ago, newly published data shows.

There were 2,029 business insolvencies in England and Wales in November 2021, up from 1,676 in November 2021, according to The Insolvency Service.

Statistics from the Insolvency Service also showed that there were 290 forced liquidations last month, five times more than in November 2021.

Claire Burden, head of advisory at Evelyn Partners, said: ‘The annual rise in monthly corporate insolvencies can be attributed to companies struggling with post-Covid debt, rising interest rates and inflationary surges that are not being addressed. passed on to already cost-conscious consumers.’

Ms Burden added: ‘We are seeing an increasing number of concerned executives struggling to keep their businesses afloat.’

“These are good companies, but they face serious and sustained increases in energy costs, wage demands and interest rates.”

Ms Burden expressed particular concern about the ‘massive level’ of liquidations, as opposed to bailouts such as administrations, where jobs are saved in many cases.

She said: ‘This highlights that drivers are leaving it far too late to take the necessary steps to save jobs. This slowdown not only has a broader economic impact through job losses, but could also lead to a series of claims against directors personally for failing to protect the interests of the company and its creditors.”

David Hudson, a restructuring partner at FRP Advisory, said: ‘Many of the UK’s businesses will not be feeling the festive spirit in these turbulent trading conditions.

“Companies continue to face high costs of doing business, shrinking already razor-thin margins due to the inherent fear of passing further costs on to consumers.”

Mr. Hudson believes that the higher number of insolvencies will continue in the coming months.

Roger Elford, a partner at Charles Russell Speechlys, said: ‘Unfortunately, companies are in a quandary – they need to preserve cash, but also support customers’ payment pipeline, creating a sort of “perfect storm”.

This is likely to get worse in the winter season, where certain industries will come under increasing pressure to balance holiday season demand with rising costs.

“Unfortunately, the current outlook is not so rosy and insolvencies in the UK, especially forced liquidations, are expected to increase in the near term.”

Shifts: Debt relief orders are also on the rise, according to The Insolvency Service

Tough times: Many companies are facing rising costs and increasingly cost-conscious consumers

In November, there were 1,595 voluntary liquidations of creditors, which is 5 percent more than at the same time a year ago, and 50 percent more than in November 2019.

The number of administrations and voluntary company schemes remained lower than before the November pandemic, the Insolvency Service added.

For individuals, 546 bankruptcies were registered in England and Wales last month, which was 16 percent less than in November 2021 and 60 percent less than in November 2019.

Separate figures from UK Finance today revealed a continued weakening of SME loan applications in the third quarter.

Overdraft applications continued to rise in the third quarter, but loan demand declined.

Gross lending through loans and overdrafts to SMEs fell to £4.5bn from £5.1bn in the previous quarter.

On credit applications among emerging SMEs, UK Finance said: ‘This points to cash flow management and working capital requirements rather than business development.’

In November, Chancellor Jeremy Hunt’s budget referred to a number of measures affecting business. He introduced a transitional corporate rate regime, a multiplier freeze, and increased support packages.

But the next revaluation of corporate rates will take place in April 2023, and this could lead to rising costs due to inflation.

To allay concerns, Hunt unveiled support packages totaling £13.6bn to help retail, hospitality and leisure businesses transition to their new tariff bills over the next five years.