Credit Strategy – News in Recovery, Restructuring and Insolvency (TRI)

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It is also 13% higher than the 1,346 seen in February 2020. Of the 1,515 insolvencies recorded this month, there were 1,329 voluntary creditor liquidations (CVLs) – doubling the number seen in February 2021, also 40% more than in February 2020.

The number of other types of business insolvencies – such as court-ordered liquidations – remained lower than before the pandemic. However, there were more than twice as many liquidations and almost double the number of administrations in February 2022 compared to February 2021.

In response to this, Christina Fitzgerald, trade body R3’s Vice President for Insolvency and Restructuring, said: “Unfortunately the end of the peak of the pandemic and the lifting of the last round of restrictions have not not lead to a shot in the arm of the business community. had hoped.

“While the economy grew in January and businesses benefited from the restrictions ending in February, it took time for footfall to pick up – and it will be some time before anything resembling normality returns. .

“Consumer spending has fallen and consumer confidence is low as people worry about the economy and their own financial situation, with inflation now a real problem for businesses and individuals. this situation is improving soon given the impact that the war in Ukraine will have on energy costs.

“In addition to this, restrictions on the use of liquidation petitions expire later this month – which could see an increase in creditors turning to legal action to recover unpaid debts.”

Month-to-month business bankruptcies, however, fell 3.2%. This is explained by a reduction in all types of business insolvencies – except for administrations, which reached their highest level in 15 months.

Commenting on this, Fitzgerald said: “This increase suggests that there are a number of insolvent companies which have the prospect of rescue, given that this is one of the primary statutory purposes of the administrative process.

‘Where possible, the insolvency profession will endeavor to secure business rescues in administration to ensure better outcomes for the business, its staff and its creditors.’

As for individuals, 588 bankruptcies were recorded, 36% less than in February 2021 and 62% less than in February 2020. As for debt relief orders (DROs), 2,242 took place in February 2022.

There were, on average, 6,384 Individual Voluntary Agreements (IVAs) registered per month in the three-month period ending in February 2022. This is 4% more than for the three-month period ending in February 2021 and 15% more than the three months ending in February 2020.

Responding to the numbers, Fitzgerald said, “It’s clear that the economic problems of the past two years are starting to take a toll on people’s financial health.

“In addition to the problems created by the pandemic, rising fuel and energy costs are a big concern for many and wages are not keeping pace with inflation. As a result, many people are concerned about their financial outlook in the coming months.

Scotland recorded 73 business bankruptcies in February 2022, 181% more than in February 2021 but 15% less than in February 2020. This figure of 73 includes 10 compulsory liquidations, 60 CVLs and three administrations.

In Northern Ireland, 18 business bankruptcies took place – three times as many as in February 2021 but 33% less than in February 2020. This included 10 compulsory liquidations, four CVLs and four administrations.

As regards individual insolvencies, 162 took place in Northern Ireland, which is 13% more in February 2021, but 40% less than in February 2020. These were 122 IVAs, 23 DROs and 17 bankruptcies .

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