Total company insolvencies in the second quarter of 2022 hit their highest quarterly level since 2009 at 5,629, as firms struggle to stay afloat amid the energy crisis.
According to new ONS data, although insolvencies decreased in 2020 thanks to government support packages, Creditors’ Voluntary Liquidations (CVLs) have hit a new high.
CVLs are the most common company insolvency in England and Wales and are typically used by small businesses going insolvent.
In England and Wales, construction, manufacturing, accommodation and food service activities, and wholesale and retail trade industries were the hardest hit, making up more than half of total business insolvencies in the first half of 2022.
While company insolvencies in the second quarter of 2022 amounted to 5,629, this was still lower than the peak of 6,943 reached in Quarter 4 (Oct to Dec) 2008 during the global financial crisis.
22 per cent of businesses said energy prices were their main concern, which is an increase from 15 per cent in late February 2022; in firms with 10 to 49 employees, the figure was 30 per cent.
City A.M. reported in August that UK government’s Insolvency Service recorded a higher number of insolvencies over the past three months than at any other point in more than a decade, after the numbers of companies declaring voluntary bankruptcies hit their highest levels since records began.
At the time, Samantha Keen, a partner at EY Parthenon, explained: “The record levels of CVLs are the first tranche of insolvencies we expected to see involving companies that have struggled to stay viable without the lifeline of government support provided over the pandemic.”
“We expect further insolvencies in the year ahead among larger businesses who are struggling to adapt to challenging trading conditions, tighter capital, and increased market volatility.”
The record figures came as the Insolvency Service also recorded slight upticks in the numbers of compulsory liquidations and other types of insolvencies. However, the numbers of both compulsory liquidations and all other types of insolvency remained below pre-Covid levels.