Voluntary Insolvencies Hit Record High

Released On 8th Feb 2022

The total number of corporate insolvencies in England and Wales rose to 14,048 in 2021, an 11.2% rise on the year before. Of these, some 90% were creditors' voluntary liquidations (CVLs), which rose by one third from 2020 to the highest annual number since the financial crisis in 2009.

Meanwhile, the overall number of company insolvencies in Q4 of 2021 was almost one fifth higher than in Q3 and 51% higher than the year-on-year figure. In addition, the numbers for company insolvency procedures other than CVLs were higher than in Q3 but remained low compared with pre-pandemic levels. 

Furthermore, in the last quarter of 2021, at 4,175 the number of CVLs - a procedure where company directors close their business voluntarily to pay off debts - was the highest level seen since records began in 1960. 

The rise in CVLs coincided with the “phasing out of measures put in place to support businesses during the coronavirus pandemic.” The measures included the furlough programme to bolster wages, which ended in September 2021.

A rise in company insolvencies after the end of the furlough scheme had been widely predicted, exacerbated by banks starting to ask for repayments on loans made during the pandemic and, unfortunately, hit smaller businesses harder. This trend will likely continue into 2022 as more pressure is on profit margins and consumer disposable incomes.

For help and advice on related matters, please contact our Insolvency Director and Appointment Taker Richard Warwick today.