2022 represented a whirlwind year for businesses across the UK. Firms have weathered the impact of higher energy prices, continuing supply chain logjams, rising inflation and interest rates, debt refinancing becoming much more expensive, alongside the return of the full suite of creditor powers to take action against businesses.
In that backdrop, for 2022, the number of insolvencies and Members’ Voluntary Liquidations (MVLs, ie solvent liquidations) nationwide rose by 11.8% from 28,279 to 31,606 compared to 2021.
Every region across the UK recorded an increase in insolvencies and MVLs year-on-year apart from London which posted a 5.9% decrease to 5,406 from 5,807 company processes. A spike in creditors’ voluntary liquidations provides a clear sign that many directors are taking the difficult step to accept they have reached the end of the road. They are engaging with advisers to take the appropriate steps to close businesses on their own terms and ideally preserve value for creditors, rather than roll the dice and potentially face a more distressed wind-down and expose themselves to personal financial risk.
Focusing on companies with revenues of more than £1m, and likely to employ larger numbers of workers, insolvency activity rose by 20.4% to 508 compared to 422 year-on-year.
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
2022
2021
*Movement in total insolvency numbers 2022 vs 2021
The most active sectors for insolvency on a national basis were: Retail and Engineering & Construction, followed by Business Services, Power & Utilities and Mining. This reflects the pain points being applied across UK industry as consumer spending is retrenched, the shift to hybrid working continues to feed through, while input costs and energy prices remain high.
Those five sectors represented more than half (52.7%) of UK insolvency activity for companies generating more than £1m in revenue and more than 81% of the £29.47billion of the total revenue impacted by these larger companies failing.
Entities with reported revenues £1m+
Excludes solvent liquidations
Insolvencies
Revenue impacted
93.23%
{{bar[93.23%]}}
Assets impacted
19.69%
{{bar[19.69%]}}
The 508 insolvencies were across a number of sectors including
Retail
83 insolvencies
{{bar[36.24%]}}
Business services
71 insolvencies
{{bar[28.52%]}}
Engineering and construction
99 insolvencies
{{bar[11.38%]}}
Power and utilities
11 insolvencies
{{bar[3.24%]}}
Mining
1 insolvency
{{bar[2.46%]}}
Insolvencies
Revenue impacted
91.38%
{{bar[91.38%]}}
Assets impacted
25.92%
{{bar[25.92%]}}
The 31 insolvencies were across a number of sectors including
Retail
7 insolvencies
{{bar[43.31%]}}
Consumer
3 insolvency
{{bar[15.72%]}}
Business services
7 insolvencies
{{bar[13.75%]}}
Engineering & construction
4 insolvencies
{{bar[9.16%]}}
Forest paper and packaging
1 insolvency
{{bar[8.12%]}}
Insolvencies
Revenue impacted
55.16%
{{bar[55.16%]}}
Assets impacted
9.42%
{{bar[9.42%]}}
The 38 insolvencies were across a number of sectors including
Engineering & construction
12 insolvencies
{{bar[53.14%]}}
Entertainment and media
3 insolvencies
{{bar[12.71%]}}
Retail
3 insolvencies
{{bar[10.71%]}}
Business services
6 insolvencies
{{bar[9.06%]}}
Consumer
5 insolvencies
{{bar[8.12%]}}
Partner - Mid Market Services, North East & Yorkshire, Leeds, PwC United Kingdom
Insolvencies
Revenue impacted
86.33%
{{bar[86.33%]}}
Assets impacted
34.6%
{{bar[34.6%]}}
The 79 insolvencies were across a number of sectors including
Retail
10 insolvencies
{{bar[53.14%]}}
Business services
12 insolvencies
{{bar[14%]}}
Entertainment and media
5 insolvencies
{{bar[7.87%]}}
Engineering & construction
17 insolvencies
{{bar[7.49%]}}
Pharma
4 insolvencies
{{bar[5.02%]}}
Insolvencies
Revenue impacted
86.91%
{{bar[86.91%]}}
Assets impacted
37.29%
{{bar[37.29%]}}
The 57 insolvencies were across a number of sectors including
Retail
10 insolvencies
{{bar[27.65%]}}
Mining
1 insolvency
{{bar[22.92%]}}
Business services
7 insolvencies
{{bar[19.06%]}}
Engineering & construction
12 insolvencies
{{bar[14.17%]}}
Consumer
3 insolvencies
{{bar[3.71%]}}
Insolvencies
Revenue impacted
80.31%
{{bar[80.31%]}}
Assets impacted
11.65%
{{bar[11.65%]}}
The 96 insolvencies were across a number of sectors including
Retail
18 insolvencies
{{bar[56.10%]}}
Power & utilities
5 insolvencies
{{bar[10.28%]}}
Energy
1 insolvency
{{bar[8.44%]}}
Engineering & construction
16 insolvencies
{{bar[7.44%]}}
Business services
12 insolvencies
{{bar[5.02%]}}
Insolvencies
Revenue impacted
60.51%
{{bar[60.51%]}}
Assets impacted
17.77%
{{bar[17.77%]}}
The 177 insolvencies were across a number of sectors including
Business services
26 insolvencies
{{bar[54.54%]}}
Retail
31 insolvencies
{{bar[26%]}}
Engineering & construction
25 insolvencies
{{bar[5.72%]}}
Hospitality and leisure
21 insolvencies
{{bar[1.84%]}}
Banking and Capital markets
6 insolvencies
{{bar[1.83%]}}
Insolvencies
Revenue impacted
93.35%
{{bar[93.35%]}}
Assets impacted
30.46%
{{bar[30.46%]}}
The 24 insolvencies were across a number of sectors including
Engineering & construction
8 insolvencies
{{bar[65.13%]}}
Power & utilities
2 insolvencies
{{bar[25.08%]}}
Retail
3 insolvencies
{{bar[3.74%]}}
Hospitality and leisure
4 insolvencies
{{bar[2.74%]}}
Transport and Logistics
3 insolvencies
{{bar[2.39%]}}
Director - Wales and West, Mid Market Services, Bristol, PwC United Kingdom
+44 (0)7714 153390
Insolvencies
Revenue impacted
30.27%
{{bar[30.27%]}}
Assets impacted
13.35%
{{bar[13.35%]}}
The 6 insolvencies were across a number of sectors including
Engineering & construction
5 insolvencies
{{bar[88.61%]}}
Retail
1 insolvency
{{bar[11.39%]}}
James Davidson
Company directors are under no illusions about the challenges in store this year - from stubbornly high inflation and rising interest rates to poor consumer sentiment and increasing raw material costs. They have survived a pandemic and continuing supply chain issues but their resilience is being sorely tested.
Working capital, the financial float which keeps businesses running before payment comes in for goods and services, needs to be carefully managed- especially as the end of the first quarter hoves into view.
The current challenging market conditions - where M&A pricing and deal appetite are by no means certain - mean all options need to be considered - including contingency planning for restructuring. By the end of March, many businesses have several major issues which will be crystallising.
Fixed rate energy contracts are often typically renegotiated and renewed around this time, notwithstanding the government’s amended energy support package.
At the start of the tax year in April, trade credit insurance, the vital cover which allows companies to extend credit terms to their suppliers and protects them if those suppliers are not able to deliver goods and services, is often renewed. Providers are taking a much more stringent view of extending the cover which is perhaps understandable as company failures continue to rise.
IOUs will also start to fall on loans granted through the Covid Business Interruption Loans Scheme. Those who took out debt under the maximum three-year repayment terms will be called upon to pay their dues.
PwC analysis of winding up petitions in 2022 tracked a fourfold increase compared to 2021.
3,366 formal applications were lodged by creditors to shut down companies over the period- up from 825 the previous year. The petitions are a key bellwether of creditor sentiment, and despite less being issued in December it remains to be seen whether creditors will take a more lenient, collaborative approach with debtors now the festive period is over and the impacts of recession are felt.
Businesses should engage early and proactively with their shareholders, lenders, landlords, suppliers and credit insurers when they need to support, allowing time for an agreement to be reached.
There are many tools available to support businesses in the UK with appropriate advice.
Please get in touch with our team for support and guidance.
This data is seasonally adjusted and is therefore subject to change
This report is generated using information provided by Bureau van Dijk, “Moody’s” for reference and information purposes only. Any ratings, estimates, forecasts, and/or other opinions contained in the information are, and will be construed solely as, statements of opinion and not statements of fact, investment advice or recommendations to purchase, hold or sell any securities.
All information is provided on an ‘as is’ basis without warranty of any kind, and Moody’s, its affiliates and its licensors expressly disclaim all representations and warranties with respect to the information, express or implied, including without limitation.
(a) any warranty as to accuracy, timeliness, completeness or results to be obtained from use of the information;
(b) the implied warranties of noninfringement, merchantability and fitness for a particular purpose; and
(c) any warranties arising by implication or from course of performance, course of dealing, or usage of trade. Moody’s, its affiliates and its licensors shall have no liability regarding the contents of this report.
PwC has a range of services that can support business with appropriate advice and strategies
Restructuring and Insolvency Partner, UK Head of Insolvency, PwC United Kingdom
Tel: +44 (0)7974 332659
Restructuring and Insolvency Partner, London, PwC United Kingdom
Tel: +44 (0)7801 976521
Partner, Restructuring and Insolvency, PwC United Kingdom
Tel: +44 (0)7796 175418