3 Key Messages For Businesses From December 2022’s Insolvency Statistics

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The Insolvency Service have now released their monthly insolvency statistics for the month of December 2022. These figures detail the number of UK insolvencies that have occurred within the month, including the percentages of which were compulsory liquidations, CVLs, administrations and so on. The release of the monthly insolvency statistics is really important for providing an insight into the current state of the economy, and the challenges that businesses are facing. Let’s take a look at the key messages to take away from the figures for December 2022:

Company Insolvencies Are Higher Than Pre-Pandemic Levels & 2021

The number of registered company insolvencies for December 2022 was 1,964. That’s 32% higher than the same month in 2021, and 76% higher than the number registered three years previously in December 2019 (1,119).  That being said, the number shows a slight decrease from the number of registered corporate insolvencies for November 2022, of which there were 2,029. December’s increase on the year previous, and prior to the pandemic is driven by a rise in compulsory liquidations and CVLs. 

The Number of Compulsory Liquidations Was 259% Higher Than December 2021

Perhaps the most significant takeaway from the insolvency statistics for last December is that the number of compulsory liquidations was a whopping 3.6 times higher than in December 2021.This is an increase from the historical lows seen during the pandemic. There were 183 compulsory liquidations, also an 8% increase from the same month in 2019. The increase is partly as a result of an increase in winding-up petitions presented by HMRC. 

CVLs Are Higher Than Pre-Pandemic Levels & 2021

The overall increase in company insolvencies shown in the monthly insolvency statistics are also driven by a rise in the number of CVLs. In December 2022, there were 1,659 CVLs, which is a steady increase from the month previously, and 22% higher than in December 2021 and 111% higher than in December 2019. 

What Factors Have Influenced These Increases?

The rise in corporate insolvencies reflected in the latest monthly insolvency statistics is a symptom of the volatile economic climate that we’re currently living in. With ongoing supply chain issues, decreased consumer confidence, soaring costs of energy and requests for higher wages, many directors are choosing to close their doors, opting for a voluntary liquidation via a CVL. In addition to this, the huge rise in compulsory liquidations in December 2022 reflects how creditors are chasing unpaid debts from businesses who have been unable to keep up with their payment schedules. 

Christina Fitzgerald, President of R3, the insolvency and restructuring trade body, has commented on the latest monthly insolvency statistics, emphasising that “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.” Adding further that these challenges “won’t go away overnight”, Fitzgerald urges anyone who is worried about their business to seek advice as soon as possible. 

If you have concerns for your business, it’s crucial to seek the advice of a licensed insolvency practitioner at the first signs of trouble. With experience in administering all insolvency processes, our team at My Liquidation will provide you with tailored advice to find the correct solution for your needs. Please don’t hesitate to get in touch with us for advice. 

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