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Response to key insolvency fi gures


There has been no time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges


Christina Fitzgerald President, R3


Corporate insolvencies decreased by 8.9% in May 2022 to a total of 1,817 compared to April’s total of 1,995, and increased by 79.2% compared to May 2021’s fi gure of 1,014. Personal insolvencies increased by 11.2% to 10,476 in May 2022 compared to 9,417 in April, and increased by 23.3% compared to May 2021’s fi gure of 8,496. The monthly fall in corporate insolvencies has mainly been driven by a reduction in Creditors’ Voluntary Liquidations. However, numbers for this process and for


overall corporate insolvencies are higher than this time last year, the year before it (2020) and in 2019. This suggests that while the current


economic challenges are continuing to hit businesses hard and are pushing an increased number into insolvency, insolvency trends are still uneven.


Buff eted In recent months, fi rms have been buff eted by rising costs, falling consumer confi dence and reluctance to spend on anything other than the essentials, which has meant they have not made the additional income they need to off set increased expenditure. There simply has not been time to draw


breath between the issues caused by the pandemic and those now arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle – and rising interest rates will add extra costs for fi rms to deal with.


Personal insolvency On the personal insolvency side of things, the monthly increase has mainly been driven by a rise in the number of people entering an Individual Voluntary Arrangement or Debt Relief Order, while bankruptcies have also risen slightly since last month. This suggests that while the economic


There simply has not been time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle – and rising interest rates will add extra costs for fi rms to deal with


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challenges the UK is facing are taking a toll on individuals, that impact is largely being felt by those on lower incomes given there has only been a slight increase in the number of people entering a bankruptcy process. Overall personal insolvencies are higher this month than in May 2021, but lower than in 2020 and slightly lower than in 2019. However, the situation is still tough for


people’s personal fi nances. While unemployment is low and job


vacancies are high, wages have not kept pace with infl ation, and many people remain very worried about how they will manage to aff ord food, fuel and energy as all three


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People’s fi nances have been aff ected by the economic fallout from the pandemic, and combined with the increased cost of living, there are potentially a lot of people who are vulnerable to the kind of unexpected shocks that can lead to them becoming insolvent


of these necessities become increasingly expensive.


Fallout People’s fi nances have been aff ected by the economic fallout from the pandemic, and combined with the increased cost of living, there are potentially a lot of people who are vulnerable to the kind of unexpected shocks that can lead to them becoming insolvent. The best thing anyone who is worried about money can do is seek advice as soon as possible. Having the conversation at an early stage – while your worries are fresh – will give you more potential options and more time to consider your next step than if you had waited till the situation worsened. Most R3 members will give an hour’s free consultation to potential new clients to allow them to understand more about the business or individual’s circumstances, and to outline the options open to them to improve their situation. CCR


June 2022


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