Corporate Insolvencies continue to soar amid financial turmoil

Corporate insolvencies soared last year as businesses struggled to cope with increasing financial turmoil, most of it outside of their control.

Carly Davies, our Debt Control Manager provides an update.

Figures from the Insolvency Service show there were a total of 1,964 corporate insolvencies in December. That was 31.9% higher than December 2021 and 75.5% higher than the same month in 2019, before the Covid pandemic.

The figures reflect the pressures companies are facing from high inflation, high interest rates, increasing cost of energy and raw materials, all combined with a reduction in consumer demand caused by the cost-of-living crisis.

Many firms are also now having to cope with repayments on government loans provided during the pandemic. Protections against creditor action have also been lifted, adding yet more pressure on struggling businesses and fuelling the increase in compulsory liquidations.

Christina Fitzgerald, President of R3, the insolvency and restructuring trade body, said the increase in insolvencies is due to creditors chasing unpaid debts following changes in legislation, as both ends of the supply chain remain squeezed by ongoing issues around consumer confidence, rising costs, and requests for increased wages.

She said: “December and January are critical periods for many firms, and these issues, combined with strikes, bad weather and the economic challenges the UK has faced over the last three years may have dealt a further blow to businesses and business owners.

“These challenges aren’t going to go away overnight – and directors are very concerned about the effects of energy and staff costs, as well as fears about how the cost of living crisis will impact on their income this year.”

If you would like more information about this article or any aspect of debt collection or credit control, please contact Carly on 01228 516666 or click here to send her an email.