Company insolvencies jump by 39% in March

Company insolvencies jump by 39% in March
Company insolvencies in the UK rose by 39% in March 2022 compared with the same month in 2021, as businesses struggled with rising interest rates, growing energy and staffing costs and the withdrawal of government Covid-19 financial support.
According to figures from the UK’s Insolvency Service, there were 2,114 company insolvencies in March 2022, a 39% increase on February 2022 and up 34% compared with March 2019. Overall, the first quarter of 2022 has seen 5,197 company insolvencies, the highest quarterly figure since Q3 2017.
The majority were Creditors’ Voluntary Liquidations (CVLs), with 1,844 CVLs in March 2022, more than twice the number of in March 2021, and up by 62% on March 2019.
Tax and advisory firm Mazars said that recent increases in interest rates had made it more expensive for businesses to service their debts, likely pushing many that had borrowed money under government-backed schemes during the pandemic into insolvency.
Businesses also have to contend with exponential increases in energy costs this year, a situation that has been worsened by the ongoing conflict in Ukraine.
Mazars partner Rebecca Dacre said: “Businesses that were just hanging on before the recent interest rate rises have seen the rise in borrowing costs push them over the edge.
“Between interest rates and inflation, this is the most difficult period for businesses since the height of the pandemic. This time they are having to manage without Government support. UK businesses will be hit by the ‘cost of living crisis’, just as consumers will be.”
She warned that more businesses will to fall into insolvency over the coming months, with a moratorium on winding-up petitions having ended on March 31. Following this, creditors are once again able to apply to make a business insolvent over unpaid debts.