Corporate insolvencies as pandemic restrictions fade


THE UK Government Insolvency Service has released statistics for corporate insolvencies in England and Wales for May 2022.

An increase in corporate insolvencies between 2021 and 2022 was expected as the government’s temporary pandemic restrictions on enforcement of creditor and landlord remedies expired. Much of this increase will be a catch-up effect: companies which have experienced difficulties for some time, but had been shielded by the temporary restrictions.

Photo: Dominik Bruhn/

It may also reflect the impact from increased prices for many products and a change in business sentiment.

Figures also show a slowdown in corporate failures since April 2022, when there were 1,991 registered corporate insolvencies. This may indicate the end of any catch-up effect — although the margin over the 2019 figures suggests it has not yet been completed.  There are many vulnerabilities in the economy: the costs of fuel, food stuffs, general inflation, increased post-Brexit export regulation, and geo-political uncertainty, which could push companies into difficulty.

The biggest increase was in creditors’ voluntary liquidations (CVLs) which are typically used where a company has no on-going business and there are few remaining assets of value.

In May 2022, there were 1,584 CVLs — 70 percent higher than May 2021 and 66 percent higher than May 2019 (but again reflecting a reduction on the previous month, in which there were 1,777 CVLs registered.

This may reflect that many affected companies’ assets were exhausted — leaving no business to rescue. In some cases, the companies entering CVL may have received bounce-back loans or other assistance, which they are now unable to repay.

Numbers of administrations and company voluntary arrangements remain lower than before the pandemic. There were 84 administrations, 95 percent higher than May 2021 but 50 percent lower than April 2019 — and a significant reduction from the 113 in April 2022.

There were 14 CVAs, which is more than double the amount in April 2021, but 55 percent lower than April 2019. That may reflect that companies with ongoing businesses are managing to stay afloat through operational business success or continued access to finance.

Alternatively, it could show that companies had no rescuable business by the time they reach for an insolvency procedure, and opt for a shut-down through CVL, rather than a business rescue through administration or CVA.

  • Patrice Crosbourne is a consultant.