1:00 AM 15th November 2023
Thousands Of Businesses Unable To Cope With Economic Pressures
Image by kalhh from Pixabay
The number of registered company insolvencies in October 2023 was 2,315, 18% higher than in the same month in the previous year (1,954 in October 2022). This was higher than levels seen while the Government support measures were in place in response to the coronavirus (COVID-19) pandemic and also higher than pre-pandemic numbers.
Julie Palmer, partner at Begbies Traynor, said:
“The report from the Insolvency Service is yet more evidence that thousands of UK businesses are simply unable to cope with the economic pressures they currently face.
“The removal of government support measures, compounded by increased interest rates, inflation-eroded margins and weak demand, have all combined to push thousands of businesses to the brink of collapse.
“Now, with the era of cheap money behind us, it means many companies who were struggling must deal with the financial consequences as they fight to service their debt.
“Our latest Red Flag Alert report revealed how the situation in the UK is deteriorating with the figures showing that the number of UK companies in critical financial distress is rapidly growing. In Q3, the number was up by 24.9% to 37,722 on the prior quarter, led by the Construction, Real Estate & Property Services and Support Services sectors.
“Levels of insolvencies are now even greater than before the pandemic and unless economic conditions rapidly improve, many of these businesses we highlighted as being in critical distress will inevitably fail as the impending debt storm hits our shores this Winter.”
The company 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.
For individuals, the total number of insolvencies in October 2023 was 9,881, 6% lower than in the same month in the previous year (10,528 in October 2022).
The individual insolvencies consisted of 703 bankruptcies, 3,245 debt relief orders (DROs) and 5,933 individual voluntary arrangements (IVAs). The lower number of individual insolvencies compared to October 2022 was driven by a 27% decline in the number of IVAs. IVA numbers in 2023 to date have been lower than the record-high numbers in 2022. DRO and bankruptcy numbers were higher than last year, with DROs in October 2023 being 71% higher than in October 2022, although the number of bankruptcies remained well below pre-2020 levels.