Insolvencies in England and Wales 21% higher than last year

The number of registered companies in England and Wales going insolvent was 21 per cent higher in November than a year ago, newly published data reveals. 

There were 2,029 company insolvencies in November across England and Wales, against 1,676 in November 2021, The Insolvency Service said. 

The Insolvency Service statistics also showed there were 290 compulsory liquidations last month, five times more than in November 2021. 

Claire Burden, head of advisory consulting at Evelyn Partners, said: ‘The year-on-year rise in the number of monthly company insolvencies can be attributed to businesses struggling to deal with post Covid debts, rising interest rates and inflationary increases failing to be passed onto already cost-wary consumers.’

Insolvencies: The number of registered companies in England and Wales going insolvent was 21%  higher in November than a year ago

Ms Burden added: ‘We are seeing an increasing number of worried directors who are struggling to keep their businesses afloat.’

‘These are good companies but facing serious and continuing increases in energy costs, wage demands and interest rates.’

Ms Burden voiced particular concern about the ‘sheer level’ of liquidations, as opposed to rescue insolvency procedures like administrations, where in many instances jobs are saved. 

She said: ‘This highlights that directors are leaving it far too late to take the steps needed to save jobs. This delay is not only having a wider economic impact through job losses, but also may cause a raft of claims against directors personally for failing to protect the interests of the company and its creditors.’

David Hudson, a restructuring partner at FRP Advisory, said: ‘Many of Britain’s businesses won’t be feeling the festive cheer in these turbulent trading conditions. 

‘Firms are still facing a high cost of doing business, which is whittling down already paper-thin margins due to the inherent fear of passing on further cost to the consumer.’

Mr Hudson believes the higher rate of insolvencies seen will continue over the coming months. 

Shifts: Debt relief orders are also on the up, according to The Insolvency Service 

Tough times: Many businesses are facing surging costs and increasingly cost-sensitive consumers 

In November there were 1,595 Creditors’ Voluntary Liquidations, which is 5 per cent more than at the same point a year ago, and 50 per cent higher than in November 2019. 

Numbers of administrations and Company Voluntary Arrangements remained lower than before the pandemic in November, The Insolvency Service added. 

For individuals, 546 bankruptcies were registered in England and Wales last month, which was 16 per cent lower than in November 2021 and 60 per cent lower than in November 2019. 

Separate figures from UK Finance today revealed a continued softening in applications for finance from SMEs in the third quarter. 

‘Overdraft applications continued to trend up in the third quarter, but demand for loans fell’, UK Finance said. 

Gross lending through loans and overdrafts to SMEs edged down to £4.5billion from £5.1billion in the previous quarter. 

On overdraft applications among SME’s rising, UK Finance, said: ‘This points to cashflow management and working capital requirements rather than business development.’  

In November, Chancellor Jeremy Hunt’s Budget referred to a number of measures affecting businesses. He introduced a transitional business rates relief scheme, a freeze on multipliers and increased support packages.

But, the next revaluation of business rates will go ahead in April 2023, and this could result in increasing costs due to inflation.

To alleviate concerns, Hunt unveiled revealed support packages totalling £13.6billion to help retail, hospitality and leisure businesses over the next five years as they transition to their new rates bills.

This post first appeared on Dailymail.co.uk