During March 2022, there was a 39% increase in UK company insolvencies and a huge 2114 businesses went into insolvency during the month. This increased from 1517 businesses going into insolvency in February 2022.

During January, February and March, we have seen the highest number of company insolvencies in any quarter of a year for the last 5 years. There were a total of 5197 company insolvencies during the first three months of 2022.

The reasons for these insolvencies are both inflation and interest rates. Businesses have had to deal with huge increases in inflation with gas and electricity costs rising by around 250% compared to previous years and increases to fuel costs as well as base product and import costs also contributing. Rises in interest rates have meant that businesses are having to make increased payments towards their debts, pushing them further into debt. 

With HMRC now moving to recover arrears from companies that have failed to agree TTP or Time to Pay arrangements and the interest rates and inflation increasing, many companies are being left with very little option but to move towards insolvency.

There are a lot of businesses who were just getting by until recent increases in borrowing costs and interest rates, who are now in a bad position financially and being forced to make drastic decisions such as insolvency.

Financially, it is probably one of the most difficult times for businesses since the covid-19 pandemic started. Whilst, during the pandemic, there was an abundance of financial support for businesses, there isn't that help available now. More businesses will fail without this support and because of the continual rises in cost of living in the UK.

There is also now the added issue of bounce back loan debts needing to be paid back and with grace periods on payments coming to an end, some companies are finding that they can't actually meet the payments for the loans that they took out to keep them afloat during the pandemic. Ironically now, these loans are sometimes the cause of businesses failing and needing to go into insolvency to clear them. The good news that can be taken from this is that the bounce back loans were at least 100% government backed if taken out and used correctly. This means that companies that go into insolvency will have their bounce back loans paid off by the government. 

It is an increasingly busy time for Insolvency Practitioners at the moment and we are starting to see an influx in business insolvencies. If you are finding that your business is in a position of increased costs causing your business to go into debt and you would like to speak to someone about whether insolvency would be your best option then please fill in this online form for free, impartial advice from an advisor from LCI Limited Company Insolvency. Someone will call you back as soon as they become available to discuss your circumstances. We can even pass you straight over to the Insolvency Practitioner while you are on the phone if you decide insolvency is your best option.