Credit, collections & insolvency news
Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales for September 2023 increased by 17% when compared to last year.
The number of registered business insolvencies was 1,967, compared to 1,688 in September 2022. Of the registered business insolvencies in September 2023 there were 1,576 CVLs, which is 14% higher than in September 2022. 255 were compulsory liquidations, which is 19% higher than in September 2022. 11 were CVAs, which is the same as in September 2022. There were 125 administrations, which is 47% higher than September 2022 and no receivership appointments.
The increase in company insolvencies has been driven mostly by CVLs, while compulsory liquidation and administration numbers have increased from historically low numbers seen during and immediately after the pandemic, returning to close to 2019 levels.
Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body said “September 2023’s corporate insolvency figures are the highest we’ve seen for this month in four years as a combination of economic issues, director fatigue and the post-COVID insolvency lag see more firms turn to corporate insolvency processes to resolve their financial issues.”
“The fact that all forms of corporate insolvency process have risen year-on-year, with the exception of CVAs which have held steady, shows that businesses are struggling on all sides and from all ends of the supply chain.”
“Compared to September 2022, more directors have turned to Creditors’ Voluntary Liquidations to wind down their businesses and more creditors have turned to Compulsory Liquidations to recover the debts they are owed. While numbers for these processes are higher than they were pre-pandemic, administration numbers have yet to return to 2019 levels, although they are higher than this time last year.”
“It’s clear that the challenging trading climate is taking its toll on businesses. Firms are operating in a climate where people are cutting back their spending on non-essential items, while at the same time the costs of operating a business remain high – and will only increase as the weather gets colder and the cost of borrow and servicing existing debts get more expensive.”
Nick O’Reilly, Director of Restructuring and Recovery at MHA said “The latest insolvency statistics reveal a grim economic landscape for many businesses. Low consumer confidence, elevated interest rates and high inflation have created a very difficult operating landscape, pushing more businesses to the brink. Insolvencies will stay at an elevated level while these conditions persist.”
“The unwinding of Covid-19 support schemes is prompting increased creditor recovery actions, including HMRC’s efforts to liquidate companies. Sectors such as retail, leisure, and the licensed trade are particularly hard-hit, with these industries struggling to recruit skilled individuals.”
“The biggest complaints struggling businesses have are the current Business Rate Regime, export-related red tape and the level of inflation. The government could help considerably with the first two and need to do so now – businesses have been asking for help for years.”
“Greater business support in the upcoming Autumn Statement will be vital to facilitate a sustainable recovery. Inflation is moving in the right direction and once it stabilises long-term interest rates should fall.”
