Corporate and personal insolvencies continue to rise year-on-year
The number of corporate insolvencies continues to rise rapidly in Q2 of 2022 with levels 81% higher than Q2 in 2021. Creditors’ Voluntary Liquidations (CVLs) increased to the highest quarterly level since the Insolvency Service started recording the figures, according to its figures released this week.
Current run rates for overall insolvencies are some 40% higher than the longer-term averages in the period 2012-2018. However, the majority of those are smaller liquidations as opposed to administrations or CVAs which are more usually associated with rescue scenarios.
Gareth Harris, restructuring partner at RSM UK, said: ‘The government’s support measures were withdrawn gradually from September to March 2022, and it is only now that we are starting to see the corporate impact. A cocktail of pressures is mounting on businesses and looks set to continue in the medium term, not least of which is the forecast increase in energy prices with no price cap for commercial users.
‘At the moment, the insolvency numbers reflect the weakest companies going to the wall first, but with further interest rate hikes extremely likely, we expect an increase in even better prepared businesses facing the prospect of administration or entering into CVAs to deal with legacy debts.’
The number of individuals entering a personal insolvency procedure remains high with a 7% increase on the same quarter last year. Q2 2022 marked the eighth full quarter to be affected by the pandemic and the legacy issues associated with it.
The seasonally adjusted figures from The Insolvency Service reveal that there were 28,946 individuals entering either bankruptcy (1,596) a debt relief order or DRO (5,772) or an individual voluntary arrangement or IVA (21,578) in Q2 2022.
IVA numbers were down 10% on the previous quarter but remain above the rolling 6-quarterly average and rose by 5% when compared to the same quarter in 2021. In a break from the recent norm, DRO numbers fell for the first quarter in six; albeit they too rose when compared to the same quarter last year. Interestingly however, bankruptcy numbers continue to decline with a decrease in numbers for the sixth successive quarter and the lowest quarterly total in 35 years.