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In Focus Collections
Crossover fallout
UK fi gures show 111.6% annual increase in corporate insolvencies
Colin Haig President, R3
Corporate insolvencies increased by 39.4% in March 2022 to a total of 2,114 compared to February’s total of 1,517, and increased by 111.6% compared to March 2021’s fi gure of 999. They were also 71.2% higher than in March 2020 (1,235). Personal insolvencies increased by 17.2% to 11,530 in March 2022 compared to 9,836 in February and were 5.3% higher than March 2021’s fi gure of 10,953. They were also 47.2% higher than in March 2020 (7,832). The increase in corporate insolvencies
in March was driven by an increase in the number of Creditor Voluntary Liquidations (CVL), a procedure initiated by directors of insolvent fi rms to close their company, which were almost 40% higher than the previous month. This suggests that many company directors
have seen the increasingly diffi cult short- medium term economic prospects as something they will not be able to overcome – and have closed their companies ahead of time. The fi gures refl ect the challenge businesses
in England and Wales continue to face. They have gone from trying to trade through a global pandemic to trading while the costs of fuel and energy rise, and while staff are concerned about whether their wages can cover the increased costs of living. Both fi rms and individuals have barely had time to draw breath.
And market conditions are far from ideal. While spending is higher than it was this time last year and in 2019, rising infl ation has meant people are spending the majority of their money on general living costs. Consumer confi dence is low as people are
concerned about their fi nances and the future of the economy, and with infl ation rising, they’re reluctant to make major purchases.
36
www.CCRMagazine.com June 2022 The crossover between the end of the
The crossover between the end of the pandemic and the increases in energy, fuel and food has hit personal fi nances in England and Wales hard
This is a situation which looks unlikely to change in the near future. Turning to the personal insolvencies, the
monthly increase is being driven by a rise in Individual Voluntary Arrangements and Debt Relief Orders (DRO). The increase in DRO numbers can largely
be attributed to the widening of the eligibility criteria for this procedure introduced at the end of June 2021, which has led to a greater number of people being able to deal with their fi nancial diffi culties through this procedure.
pandemic and the increases in energy, fuel and food has hit personal fi nances in England and Wales hard. Credit card borrowing has increased and
savings levels have dropped as people attempt to cope with the rising cost of living, and while unemployment levels are falling, wages have failed to keep pace with infl ation. And with no sign that price rises are likely
to slow for some time, the situation could be set to become more challenging as the year goes on. We urge anyone who is worried about
their fi nances – business or personal – to seek advice as soon as possible. Talking about your money worries is one of the most challenging conversations you will have, but having it earlier gives you more options, more time to take a decision about your next move and potentially a better outcome than if you had waited till the problem had become more serious. CCR
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