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Big rise in company insolvencies in January

Big rise in company insolvencies in January
England and Wales recorded 1,560 registered insolvencies in January 2022, more than double the 758 figure for January 2021. The latest figure is on a par with the 1,508 number insolvencies in January 2020.
January 2022 saw 1,358 creditors’ voluntary liquidations (CVLs) take place, more than double the number in January 2021 and 34% higher than January 2020. The number of CVLs is similar to the figures reported in December 2021.
Christina Fitzgerald, vice president of insolvency trade body R3, said this suggests company directors are “continuing to choose to close their businesses” rather than attempting to carry on trading.
She said: “The figures highlight the toll the current business climate is taking on firms in England and Wales. Over the last two months, businesses have had to trade through a perfect storm of issues which will have affected them and their income.
“They’ve battled a myriad of factors including new Covid measures, a slowdown in consumer spending, and rising inflation, with steep increases in energy prices a particular pinch-point. All of these will have taken a toll.
“After nearly two years of trading through a pandemic, these factors may increasingly become too difficult for many directors to deal with. Against a backdrop of continued pandemic-related uncertainty, there is likely to be a significant number of directors who will be increasingly doubtful that their business can survive much longer.”
Some 118 compulsory liquidations took place in January 2022, 131% higher than in January 2021, but 60% lower than January 2020. And 13 company voluntary arrangements (CVAs) took place in January 2022, 38% lower than January 2021 and 59% lower than January 2020.
There were 71 administrations, which was 3% lower than January 2021 and 58% lower than January 2020.
When it comes to individual insolvencies, 1,873 debt relief orders (DROs) and 575 bankruptcies took place in January 2022.
The number of DROs was 59% higher than in January 2021, but 15% lower than in January 2020. Bankruptcies, meanwhile, were 32% lower than in January 2021 and 63% lower than in January 2020.
Fitzgerald said: “The figures reflect the ongoing toll the pandemic is taking on personal finances in England and Wales. People are worried about how rising costs across the board will affect them, particularly energy prices, so it’s no wonder that people are worrying more about money.”
• Between 4 May 2021, when the scheme was launched, and 31 January 2022 there were 46,406 Breathing Space registrations. These comprised of:
• 45,710 standard breathing space registrations.
• 696 mental health breathing space registrations (for those receiving mental health crisis treatment).
In January 2022 there were 5,279 breathing space registrations. This was made up of 5,207 (98.6%) standard breathing space registrations and 72 (1.4%) mental health breathing space registrations.
The Debt Respite Scheme (Breathing Space) is a scheme designed to provide individuals with the time they need to seek advice on their financial affairs to ensure they have the best opportunity to resolve these liabilities.