According to official data that showed a 16% spike from a year earlier, more companies in England and Wales declared bankruptcy in March than at any point since monthly records began three years ago.
With the start of the Covid epidemic, the rate of businesses going bankrupt dramatically decreased, thanks to government support initiatives and lockdowns that slowed the courts' processing of insolvency cases.
However, insolvencies are once again on the rise as businesses struggle with mounting prices and a weak economy. According to the Insolvency Service, insolvency among corporations in March was primarily caused by voluntary liquidations by creditors.
"Businesses are struggling to secure financing and pay off their loans due to high interest rates and the wider impact inflation and consumer sentiment is having on sales and cash flows," said David Kelly, head of insolvency at accountants PwC.
"Company insolvencies will likely continue to rise in the short term, making for a challenging spring," he added. Individual insolvencies also rose sharply in March, although were still down slightly on a year ago.
Breathing space applications - which holds off creditor action for 60 days so people in debt can reorganise their finances - rose to a new high in March, following their introduction in May 2021.
"People are still very worried about money and the economy, and are reluctant to spend on anything other than the basics," said Nicky Fisher, vice president at insolvency and restructuring trade body R3.