The number of Creditors’ Voluntary Liquidation (CVL) cases recorded across England and Wales during December was up by 22 per cent compared with the same month of 2021.
Compulsory liquidation cases also increased sharply during December, which the Insolvency Service has attributed in large part to an uptick in winding up petitions being presented by HMRC.
In all there were 1,659 CVL cases recorded in December 2022, which is way up on the previous year and more than twice as many as were recorded in December 2019, shortly before the start of the Covid pandemic.
The overall number of company insolvencies in the final month of last year was 32 per cent higher than in December 2021 and some 76 per cent higher than in December 2019.
During the pandemic, businesses were for the most part shielded from their creditors by relevant government legislation but those temporary protections have now generally been removed.
As a result, more winding up petitions are being pursued by creditors and indebted businesses are being legally obliged either to repay their debts or to enter a form of administration or liquidation.
The insolvency and restructuring trade body R3 has said company directors are increasingly opting to close down their businesses voluntarily as financial pressures have mounted in recent months.
Companies across industries have been facing some fierce headwinds in recent quarters with inflationary pressures mounting, consumer confidence levels down and employees often demanding wage increases.
“These challenges aren’t going to go away overnight,” noted Christina Fitzgerald, the R3 president.
“Directors are very concerned about the effects of energy and staff costs, as well as fears about how the cost of living crisis will impact on their income this year.”
Ms Fitzgerald has said that any company directors worried about what the future might hold for their operations from a financial perspective should potentially seek expert advice on their liquidation options.
“We urge anyone who is anxious about their business or personal finances to seek advice as soon as possible,” she said.
“Talking about your concerns about money is very, very hard, but being brave and having that conversation as early as possible will give you more options.”
