This year sees ‘busiest quarter for corporate insolvencies since 2012’

The first quarter of this year was the busiest for corporate insolvencies since 2012, according to the latest figures.

It’s feared there may be worse to come because of rising inflation, increased fuel costs, and reduced consumer spending. The increase in interest rates is also likely to have an adverse effect on business viability.

Data from the Insolvency Service show there were 4,896 underlying corporate insolvencies in Q1 2022 – an increase of 6.1% from Q4 2021’s figure of 4,615, but a rise of 112% on Q1 2021’s figure (2,309).

There were 32,305 personal insolvencies in Q1 2022 – an increase of 16.8% from Q4 2021’s figure of 27,668, and an increase of 14.2% on Q1 2021’s figure of 28,298.

Christina Fitzgerald, President of insolvency and restructuring trade body R3, said: “This has been the busiest quarter for corporate insolvencies since 2012 as firms who have struggled with the economic consequences of the pandemic are now having to deal with the sharp rise in inflation.

“These statistics provide further proof that while the Government’s COVID support measures prevented an initial sharp rise in corporate insolvencies, the economic damage caused by the pandemic couldn’t be mitigated away forever.

“The figures reflect the tough climate businesses have been operating in over the last quarter. At a point where many businesses needed a return to normality, rising fuel and energy costs have put them under additional strain, and the effects of the increased cost of living has prevented the spending boom many were hoping for from happening.

“Businesses have also faced the end of the final set of Covid measures and creditors can once again issue winding-up petitions against companies for debts of £750 or more (with the exception of landlords with Covid rent arrears).”

Businesses are advised to keep a tight rein on credit control and take action quickly to ensure invoices to customers are paid on time to maintain cash flow and prevent debts building up.

Please contact us if you would like help with debt collection and credit control.