HMRC insolvency statistics were released on 18 January, and they revealed that the number of company insolvencies in December 2021 was 1,486.
This was 20% higher than the number registered in the same month in the previous year and 33% higher than the number registered two years.
In December 2021 there were 1,365 Creditors’ Voluntary Liquidations (CVLs), which is 37% higher than in December 2020, and 73% higher than in December 2019. Other types of company insolvencies, such as compulsory liquidations, remained lower than before the pandemic.
For individuals, 434 bankruptcies were registered, which was 47% lower than December 2020 and 60% lower than December 2019.
There were 1,872 Debt Relief Orders (DROs) in December 2021. Following changes to the eligibility criteria on 29 June 2021 including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000, DRO numbers were higher between July and December 2021 than in previous months since the start of the COVID-19 pandemic. The number of DROs registered in December 2021 was 51% higher than December 2020 but remained lower than pre-pandemic levels (10% lower than in December 2019).
On average, there were 6,648 IVAs registered per month in the three-month period ending December 2021, which is 16% lower than the three-month period ending December 2020 but 15% higher than the three-month period ending December 2019.
A breathing scheme was announced which ran from 4 May 2021 to 31 December 2021. During this time there were 41,127 registrations, comprised of 40,503 standard breathing space registrations and 624 Mental Health breathing space registrations.
From the start of the coronavirus pandemic until mid-2021, overall numbers of company and individual insolvencies have remained low when compared with pre-pandemic levels. This is likely to be partly driven by government measures put in place to support businesses and individuals during the pandemic, including:
- Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).
- Enhanced government financial support for companies and individuals.
Between 26 June 2020 and 31 December 2021, in England & Wales, 15 moratoriums were obtained, and 10 companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.
Our View
The latest statistics show that corporate insolvencies are now beginning to rise as the financial impact of the pandemic on business continues to unravel.
Our expectation is that this is still the tip of the iceberg, and we will not know the true fallout of the pandemic for at least the next 12 months.
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Cowgills is a leading independent firm of Chartered Accountants and Business Advisors based in the North West of England – from Greater Manchester to Liverpool. We use our sector experience to deliver tailored financial solutions and support for businesses.
Please do get in touch with our team if you require advice or support.
Disclaimer
The information was correct at time of publishing but may now be out of date.
