Corporate insolvencies soar in Q1 2022
Corporate insolvencies in England and Wales jumped to 4,896 during the first quarter of 2022 to reach the highest level recorded since 2012 according to figures released at the end of April by the UK Government’s Insolvency service.
This figure is a 6% increase on the Q4 2021 statistic, and an alarming 112% increase compared to Q1 2021 when the full COVID response support measures and restrictions on court action to pursue debts were in place.
The insolvency service figures for the last two quarters indicate that these measures postponed a rise in levels of corporate insolvency rather than preventing them.
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Forecasts show insolvency rates likely to increase further…
While the Insolvency Statistics are backward looking, the Red Flag Alert research published by Begbies Traynor Group looks forward by looking at the number of companies currently in financial distress.
The latest report, released at the end of April, shows an increase of 19% in the number of companies in “critical financial distress” compared to the same period a year earlier. County Court Judgements were up by 157% against the same period a year earlier.
The good news is that businesses in significant (not critical) financial distress is down 20% on a year ago, though at the same level as the previous quarter.
All this leads Julie Palmer, partner at Begbies Traynor, to warn that “The critical distress and CCJ data are likely predictors of a wave of insolvencies coming – it’s just a case of when the dam holding it back finally bursts.”
An update on the Credit insurance market from our specialists
Credit insurers remain open for business and continue to support businesses providing goods or services on credit terms. With 30 years of experience, The Channel Partnership has seen the UK economy go through peaks and troughs and the credit insurance market looks better prepared for tough times now than it has in the past.
The long-awaited increase in corporate insolvencies (and Credit insurance claims) is starting to feed through with McColl’s retail group the most recent casualty – the £1.3bn turnover convenience store operator reportedly being sold to Morrisons through a pre-pack administration.
The advice to companies considering credit insurance is to act quickly; it is always better to buy an umbrella before the downpour starts.
Contact The Channel Partnership if you have any queries related to the information covered in this post.
