The number of companies entering insolvency rose by almost a fifth last month as a result of the cost of living crisis and higher interest rates.

Registered company insolvencies increased by 17.5 per cent year-on-year to 1,783 in February, according to figures from the Insolvency Service.

Nicky Fisher, vice-president of the restructuring industry body R3, said that corporate insolvency figures had hit their highest in four years, driven by directors choosing to close their own businesses using creditors’ voluntary liquidations. The number of CVLs rose by 13 per cent to 1,505.

“After nearly three years of lockdowns, supply chain issues, rising costs and falling revenues, many business owners have simply had enough, and are shutting up shop before they are forced to,” Fisher said.

“Trading conditions remain tough for many in England and Wales and it seems the traditional Christmas and New Year trading period didn’t give them the boost they needed to survive.”

Restructuring advisers have said they expect to see more activity as businesses struggle with the rising cost of debt. Lindsey Cooper, of RSM UK’s restructuring advisory business, said: “The impact of rising interest rates has yet to fully bite and is likely to cause more challenges for those sectors impacted by consumer spending.”