R3 Responds to January 2022 Insolvency Statistics

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Eleanor Temple, chair of commercial insolvency and restructuring body R3 in Yorkshire

Business bankruptcies rose 4.8% in January 2022 to a total of 1,560 from December’s total of 1,488, and rose 105.8% from January 2021’s figure of 758 and were 3.4% higher than in January 2020 (1,508)

Personal insolvencies increased by 0.3% to 8,477 in January 2022, from 8,451 in December 2021, and were 1.8% higher than the January 2021 figure of 8,331

ELeanor Temple, chairman of commercial insolvency and restructuring body R3 in Yorkshire and solicitor at Kings Chambers in Leeds, responds to today’s release of business and personal insolvency statistics for January 2022 for England and Wales:

“The increase in business bankruptcies is due to an increase in compulsory liquidations, which were 131.4% higher than the same period last year. This suggests that creditors are now starting to take action regarding unpaid debts, after having been legally prevented from doing so since the start of the pandemic.

“The number of voluntary creditor liquidations remained similar to the same period last month, suggesting that many business leaders continue to choose to shut down their businesses rather than attempt to continue operations in the current climate. .

“The figures released today highlight the impact of the current business climate on businesses in England and Wales. Over the past two months, businesses have faced a perfect storm of issues that will have affected them and their revenue. They battled a myriad of factors including new COVID measures, slowing consumer spending and rising inflation, with a sharp rise in energy prices as a particular pinch point. All of this will be expensive.

“After nearly two years of trading during a pandemic, these factors may become increasingly difficult for many administrators to manage. Amid continued pandemic-related uncertainty, it is likely that a significant number of directors will increasingly doubt that their business can survive much longer.

“With regard to personal insolvencies, the slight increase we have seen in the figures released today is due to an increase in the number of people going bankrupt over the past month, and suggests that more people are unable to pay their debts and look to this process to return to a more balanced financial keel.

“The figures reflect the continued toll of the pandemic on personal finances in England and Wales. People worry about how rising costs at all levels will affect them, especially energy prices, so it’s no wonder people care more about money.

“We urge anyone concerned about their finances – whether professional or personal – to seek advice about their situation as soon as possible. Talking about your money worries is incredibly difficult, but having a conversation about your concerns as soon as possible will give you more potential options, more time to make a decision, and a greater chance of improving your situation than if you had waited until she got worse.

“Many R3 members will give one hour of free consultation to people in this position, so they can better understand their situation and outline their options for resolving it.

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