R3 responds to February 2022 insolvency statistics

R3 Southern and Thames Valley - Garry Lee

The number of businesses entering administration has hit a 15-month high, according to the R3 trade body for restructuring and insolvency professionals in Dorset and Hampshire.


The newly published insolvency figures for February 2022 from The Insolvency Service for England and Wales show that overall, corporate insolvencies were down slightly in February 2022 compared with January 2022 but more than double the number in February 2021.


The figures for England and Wales showed:

  • Corporate insolvencies fell by 3.2% in February 2022 to 1,515 compared to January's total of 1,565, and increased by 121.2% compared to February 2021's figure of 685. They were also 12.6% higher than in February 2020 (1,346).
  • Personal insolvencies increased by 15.8% to 9,825 in February 2022 compared to 8,486 in January, and were 43.7% higher than February 2021's figure of 6,839. They were also 14.4% higher than in February 2020 (8,590).

Within the figures for February 2022’s corporate insolvencies there were 109 administrations – the highest since December 2020 when there were 150.


Garry Lee, chair of R3’s Southern and Thames Valley region, including Dorset and Hampshire, said: “The monthly fall in corporate insolvencies was driven by a reduction in all types of corporate insolvency process, with the exception of administrations, whose numbers increased to a 15-month high.


“This increase suggests that there are a number of insolvent businesses which have some prospect for rescue, given this is one of the main statutory purposes of the administration process.


“Wherever possible the insolvency profession in Dorset and Hampshire will work to secure the rescue of businesses in administration to help ensure better outcomes for the business, its staff and its creditors.


“However, despite the month-on month decline overall, the figures released today show corporate insolvency numbers were significantly higher than this time last year and the year before.”


In February, as well as 109 administrations, there were 1,329 creditors’ voluntary liquidations, 74 compulsory liquidations and three company voluntary arrangements.


The slight month-on-month drop in overall corporate insolvencies came as domestic legal restrictions were lifted under the government’s ‘living with Covid’ plan in February.


Restrictions on the use of winding-up petitions are coming to an end later in March, something which could see an increase in creditors turning to legal action to recover unpaid debts.


Garry, who is an associate director in the recovery and restructuring services department at accountancy firm Smith & Williamson’s Southampton office, said: “Now is the time for directors in Dorset and Hampshire to be alert to the signs of financial distress and to take action if they show themselves.


“We know conversations about a business’ financial position are some of the hardest to have.


“However, speaking up about concerns at an early stage with a qualified and regulated advisor typically leads to a better outcome than waiting until the problem worsens.”


The increase in personal insolvencies was driven by a rise in Debt Relief Orders and Individual Voluntary Arrangements.


This suggests that more people are looking for help with resolving their financial issues and to come to an arrangement to manage their debts.

 

Bookmark and Share
All content © The Business (Dorset) Ltd www.bizmag.co.uk
Website designed and managed by WhitesandsPR www.whitesandspr.com