BUSINESS insolvencies hit a 13-year high in 2022 as the “dam burst” following the Covid pandemic.

The restructuring and insolvency industry body R3 said a tsunami of corporate insolvencies came after the end of government support which suppressed insolvencies for two years.

Its analysis of the latest statistics for England and Wales showed there were 22,109 underlying corporate insolvencies last year – the highest since 2009’s figure of 24,035.

The 2022 figure was up 57.3 per cent on 2021 and 75 per cent up on 2020. It included the highest number of creditors’ voluntary liquidations in 62 years as more company directors appeared to “run out of road” and closed their businesses.

Garry Lee, chair of insolvency and restructuring trade body R3’s southern region, covering Dorset and Hampshire, said: “2022 was the year the insolvency dam burst.

“After two years of being supressed by government support programmes, corporate insolvency numbers hit a 13-year high last year.

“This was mainly due to creditors’ voluntary liquidations reaching their highest level in 62 years, 18,822, as more and more directors turned to this process to close down their businesses.

“After nearly three years of trading through a pandemic, and in the face of the end of government support, rising costs and a cost-of-living crisis, many directors simply ran out of road this year and chose to close their businesses before the choice was taken away from them.

“Alongside this, the end of the government’s temporary legislation on winding-up orders has left creditors free to pursue unpaid debts, which is why compulsory liquidation numbers are at their highest in three years.

“With the entire supply chain under pressure from increased costs, the flexibility we saw from creditors during and in the aftermath of the pandemic to those who owed them money has disappeared, and many are now taking action to recover the debts they are owed in an attempt to balance their own books.”

Mr Lee, who is an associate director in the recovery and restructuring services department at professional services group Evelyn Partners’ Southampton office, added: “Inflation is still high, supply chains are still squeezed, and people are still worried about the cost of living.

“So, it’s likely we’ll see insolvencies continue to rise this year unless the trading climate takes a drastic turn for the better.

“We urge directors in Dorset and Hampshire to be aware of the signs their business is financially distressed and act as soon as they see them.

“Rising stock, problems paying staff or suppliers and cashflow issues are all signs a business is struggling.”

Personal insolvencies reached their highest numbers for three years in 2022 as a result of more people turning to individual voluntary arrangements and debt relief orders.

However, bankruptcy numbers were at a 10-year low, suggesting that more people were seeking arrangements with their creditors earlier.