The number of British companies filing for insolvency hit its highest level in a decade last quarter as businesses struggled after Covid support was lost.
The Insolvency Service said that between April and June, 5,629 companies became insolvent — 13 per cent higher than in the same period of 2022. Not since the third quarter of 2009 have more companies gone bust.
There were 81 per cent more insolvencies than in second quarter of last year, when businesses were still able to access the furlough scheme and bounce back loans, and had relief from landlords seeking unpaid rent.
Of the insolvencies, 90 per cent, or 4,908, were creditors’ voluntary liquidations, when directors start winding down their business. The Insolvency Service said that was the most CVLs it had known in any quarter since it started recording such data in 1960.
Restructuring experts said companies were struggling to cope with rising costs and supply chain disruption.
Samantha Keen, a restructuring strategy partner at EY-Parthenon, said the second-quarter was just “the first tranche of insolvencies”. “We expect insolvencies among larger businesses that are struggling to adapt to challenging trading conditions, tighter capital, and increased market volatility.”
Construction firms made up a fifth of insolvencies. Wholesale retailers and accommodation and food services were the next worst-affected sectors.
Jeremy Whiteson, a restructuring partner at law firm Fladgate, said: “Inflation, recession fears, constriction of fuel and food supply and geopolitical risks all threaten to worsen the position for business in England and Wales.”