Stephen Hunt, a partner at insolvency firm Griffins, attributed the rise partly to reduced costs driven by technology but warned of misuse. "CVLs are often sold by unqualified salespeople to unsophisticated clients seeking cheap liquidation," he said.
Hunt also highlighted that the higher cost of compulsory liquidation, which is managed by the Official Receiver, has contributed to the increase in CVLs, as the latter is seen as a more affordable option.
Fixed fees introduced in 2016 have made many insolvencies financially unviable for practitioners to investigate, raising concerns that significant tax and creditor debts are being written off without proper examination.
Nicky Fisher, past president of R3, the UK's insolvency trade body, noted that winding up a company via the courts has become more costly, with creditors often reluctant to commit funds when recovery prospects are slim.
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