12:05 pm, February 1, 2023
The number of firms that collapsed into insolvency in England and Wales last year surged to its highest total since 2009, according to latest figures.
Insolvencies registered in 2022 leapt by 57 per cent to 22,109 from the previous year, new data from The Insolvency Service has revealed.
Experts said the increase was partly driven by the end of measures by the government to support firms during the pandemic as well as weaker consumer demand.
The rise was also partially linked to the higher number of firms operating in total during the year.
The service, which is an executive agency of the Department for Business, Energy and Industrial Strategy, said the rise was driven by the highest number of creditors’ voluntary liquidations since records began in 1960.
These let directors voluntarily fold their insolvent firms.
The final quarter of 2022 showed that insolvencies continued to accelerate during the year, as they increased by seven per cent to 5,995 compared with the previous three-month period.
Christina Fitzgerald, president of insolvency and restructuring trade body R3 and partner at Edwin Coe LLP, said: ‘2022 was the year the insolvency dam burst.
‘After nearly three years of trading through a pandemic, and in the face of the end of government support, rising costs and a cost-of-living crisis, many directors simply ran out of road this year and chose to close their businesses before the choice was taken away from them.
‘Alongside this, the end of the government’s temporary legislation on winding-up orders has left creditors free to pursue unpaid debts.’
David Kelly, head of insolvency at PwC’s restructuring and forensics practice, said: ‘Annually, the construction, retail, accommodation and food services sectors were the hardest-hit industries.’
He said that was ‘a telling sign of the impact of rising costs and shift in consumer habits and the continued challenges certain sectors are facing getting and retaining staff’.
Kelly added: ‘We are seeing many companies putting themselves in the shop window for a possible merger or acquisition, which is a sensible move in this environment, helping redistribute capital.
‘However, during the current challenging market conditions where values and appetite are uncertain, all options need to be considered, including contingency planning for restructuring.’
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