• Corporate insolvencies decreased by 8.9% in May 2022 to a total of 1,817 compared to April’s total of 1,995, and increased by 79.2% compared to May 2021’s figure of 1,014.
• Personal insolvencies increased by 11.2% to 10,476 in May 2022 compared to 9,417 in April, and increased by 23.3% compared to May 2021’s figure of 8,496.
Eleanor Temple, chair of the insolvency and restructuring trade body R3 in Yorkshire and a barrister at Kings Chambers in Leeds, responds to today’s publication of the May 2022 corporate and individual insolvency statistics for England and Wales:
“The monthly fall in corporate insolvencies has mainly been driven by a reduction in Creditors’ Voluntary Liquidations. However, numbers for this process and for overall corporate insolvencies are higher than this time last year, the year before it (2020) and in 2019.
“This suggests that while the current economic challenges are continuing to hit businesses hard and are pushing an increased number into insolvency, insolvency trends are still uneven.
“In recent months, firms have been buffeted by rising costs, falling consumer confidence and reluctance to spend on anything other than the essentials, which has meant they haven’t made the additional income they need to offset increased expenditure.
“There simply hasn’t been time to draw breath between the issues caused by the pandemic and those now arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle – and rising interest rates will add extra costs for firms to deal with.
“On the personal insolvency side of things, the monthly increase has mainly been driven by a rise in the number of people entering an Individual Voluntary Arrangement or Debt Relief Order, while bankruptcies have also risen slightly since last month.
“This suggests that while the economic challenges the UK is facing are taking a toll on individuals, that impact is largely being felt by those on lower incomes given there has only been a slight increase in the number of people entering a bankruptcy process. Overall personal insolvencies are higher this month than in May 2021, but lower than in 2020 and slightly lower than in 2019.
“However, the situation is still tough for people’s personal finances. While unemployment is low and job vacancies are high, wages haven’t kept pace with inflation, and many people remain very worried about how they’ll manage to afford food, fuel and energy as all three of these necessities become increasingly expensive.
“People’s finances have been affected by the economic fallout from the pandemic, and combined with the increased cost of living, there are potentially a lot of people who are vulnerable to the kind of unexpected shocks that can lead to them becoming insolvent.
“The best thing anyone who is worried about money can do is seek advice as soon as possible. Having the conversation at an early stage – while your worries are fresh – will give you more potential options and more time to consider your next step than if you had waited till the situation worsened.
“Most R3 members will give an hour’s free consultation to potential new clients to allow them to understand more about the business or individual’s circumstances, and to outline the options open to them to improve their situation.”