Company insolvencies surged to 22,190 in 2022 - the highest level seen since 2009 and 57% higher than in 2021, says the insolvency service.
According to the latest insolvency figures, this increase was driven by the largest annual number of creditors' voluntary liquidations (CVLs) since records began in 1960.
Furthermore, while 2021 saw a record low of 491 compulsory liquidations, these figures soared to 1,945 last year, with 720 reported in the last three months of 2022 alone.
The figures also show that 1 in 202 active companies entered insolvent liquidation in 2022, compared to only 1 in 303 companies in 2021.
Insolvency rates rose across most industries last year, with the construction sector hit the hardest with 4,143 insolvencies - nearly 20% of the total number in 2022.
The wholesale and retail sector saw 3,263 companies enter insolvency in 2022, followed by the hospitality industry (2,704) and administrative and support services (2,212).
Eleanor Temple, chair of the trade body R3, said:
"We urge directors to be aware of the signs their business is financially distressed and act as soon as they see them.
"Seeking advice gives directors more options and more time to make a decision and a better outcome than if they had waited until the situation became more serious."
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