Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales for October 2023 was 2,315, 18% higher than in the same month in the previous year (1,954 in October 2022).
The business insolvencies consisted of 256 compulsory liquidations, 1,889 creditors’ voluntary liquidations (CVLs), 146 administrations, 23 company voluntary arrangements (CVAs) and one receivership appointment. Numbers of compulsory liquidations, CVLs, CVAs and administrations were all higher than in October 2022. The increase in company insolvencies was driven mostly by CVLs, while compulsory liquidation and administration numbers increased from historically low numbers seen during and immediately after the pandemic, returning to close to 2019 levels.
Of the 2,315 registered business insolvencies in October 2023 1,889 were CVLs, which is 19% higher than in October 2022, 256 were compulsory liquidations, which is 2% higher than last year, 23 were CVAs, up 4 times higher than in October 2022. Whilst there were 146 administrations, which is 36% higher than last year with one receivership appointment.
Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body said “Firms have been battling economic issues for three and a half years now, and corporate insolvency numbers are rising as more and more directors run out of options. The figures published today show that Creditors’ Voluntary Liquidations and Administrations are at the highest levels we’ve seen in October in more than four years, and this reflects the tough trading climate and the level of director fatigue among the business community in England and Wales.”
“Businesses are being battered from all sides. Costs have increased, demands for wages are incoming and people are spending less as they look to save ahead of the winter and to make sure they have enough left to cover the basics. If the Christmas trading period doesn’t bring a wave of new income, we could see insolvencies continue to rise in the new year, and at the moment, it’s impossible to predict whether this will be a badly needed boost or the final blow for struggling firms.”
“In these kinds of circumstances, it’s critical that directors are alert to the signs of financial distress, and act if any of them present themselves. Cashflow problems, stock piling up and issues paying rent, taxes or suppliers are all signs that a business is distressed and need to be acted upon before they get any worse – and while the business has as wide a range of potential solutions open to it as possible.”
Nick O’Reilly, Director of Restructuring and Recovery at MHA said “The government must act swiftly to stem the rising tide of insolvencies and stimulate growth. The current plight of hospitality and retail businesses demands urgent government intervention through a comprehensive overhaul of the business rate system.”
“The government must create a system that is based on turnover rather than property values. A minimum fixed rate that increases based on turnover would mean that retailers and local authorities would both be winners when a business does well and ensure they are not overburdened in downturns.”
“HMRC also desperately requires increased funding to streamline its financial debt recovery processes. The existing Time to Pay system is a postcode lottery as to whether a firm will secure an agreement to repay its debts or face a winding up petition. Businesses need a more cohesive approach from HMRC so they have greater certainty when it comes to managing finances.”
“To stimulate growth, a multifaceted approach is needed. This should include the reduction of red tape on exports, lowering interest rates and implementing a tax stimulus. Businesses yearn for policies that instil hope and foster a conducive environment for sustained growth. It is high time the government implemented measures that resonate with the needs of businesses and propel the economy forward.”