R3 responds to January insolvency statistics

15 February 2022

Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3, responds to today's publication of the January 2022 corporate and individual insolvency statistics for England and Wales:

“The increase in corporate insolvencies is being driven by a rise in compulsory liquidations, which were 131.4% higher than this time last year. This suggests that creditors are now starting to take action over unpaid debt, having been legally prevented from doing so since the start of the pandemic.

“Numbers of Creditors’ Voluntary Liquidations have remained similar compared to this time last month, which suggests that many company directors are continuing to choose to close their businesses rather than attempting to carry on trading in the current climate.

“The figures published today 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.

“When it comes to personal insolvencies, the slight increase we’ve seen in the figures published today is being driven by a rise in the number of people entering a bankruptcy over the last month, and suggests that more people are unable to pay their debts and are turning to this process to return to a more even financial keel.

“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. 

“We would urge anyone concerned about their finances – whether those are business or personal ones – to seek advice about their situation as soon as possible. Talking about your money worries is incredibly tough, but having a conversation about your concerns as early as possible will give you more potential options, more time to take a decision, and a greater chance of improving your situation than if you’d waited until it worsened.

“Many R3 members will give an hour’s free consultation to people who are in this position, so they can understand more about their situation and outline the options that are open to them for resolving it.”