The number of companies going bankrupt and going out of business has reached the highest level since the financial crisis of 2009, the latest victim of which was ticket seller Paperchase.
There were 22,109 business bankruptcies in England and Wales in 2022, up 57%, according to official figures, with experts calling 2022 “the year of the dam burst.”
Card and stationery retailer Paperchase was the latest to go out of business as it filed for bankruptcy on Tuesday. The retailer hired administrators after failing to secure financial assistance.
Tesco said it has acquired the Paperchase brand, but not its stores, in a package management deal. Paperchase’s 820 employees and 106 stores in the UK and Ireland remain at risk from the deal after Tesco said it would launch the brand in its stores.
The bankruptcy service said the surge was due to the highest annual number of voluntary creditor liquidations (CVLs), in which directors voluntarily decide to close a company because it has become insolvent and cannot continue in business, since the 1960s.
The number of CVLs was more than 20 percent higher than before the pandemic.
Experts pointed to the end of government Covid support measures and weak consumer demand in some sectors. According to the bankruptcy office, construction, retail and gastronomy were hit hard.
The number of bankruptcies of individuals amounted to 118,851, which is 8% more than in 2021 (110,044).
Christina Fitzgerald, president of bankruptcy and restructuring organization R3, said 2022 was “the year of bankruptcy.”
“After two years of suppressing government subsidies, corporate bankruptcies reached their highest level in 13 years last year.
“After almost three years of trading in a pandemic, despite the withdrawal of government support, rising costs and a cost of living crisis, many executives this year simply lost their way and decided to close their business before the choice was made. done. taken from them.”
She said the lifting of time limits on lawsuits to secure unpaid debts has pushed creditors to take legal action to try to get their money back. Officials said mandatory liquidations have returned to pre-pandemic levels.
Unpaid tax returns from HM Revenue & Customs could mean those numbers will continue to rise, experts warn. “It seems likely that corporate bankruptcies will remain high and continue to rise,” said John Cullen of Accountants Menzies.
“One of the reasons we are seeing an increase in administrations and CVLs is because given the number of insolvent companies and their own recruitment struggles, HMRC cannot collect all of its debts as quickly as usual,” he said. . added.
Source: I News
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