The Insolvency Service figures for Q3 (July to September 2023) show that the number of company insolvencies were at their highest since Q2 2009. There was a 10% increase compared to Q3 in 2022, and although there was a slight decrease in the rate of insolvencies after Q2, the trend is continuing upwards and numbers remain at their highest level in over 14 years.
Creditors’ Voluntary Liquidations (CVLs) accounted for the biggest rise with the highest recorded since 1960 they were also the most popular insolvency procedure accounting for 80% of cases. Compulsory liquidations accounted for 12% of all cases, administrations sat at 7.5% and the final 0.5% were Company Voluntary Arrangements (CVAs).
The corporate insolvency figures for Quarter 3 are still high (despite a 2% decrease from Q2) due to a variety of factors such as a post-COVID insolvency lag, inflation and borrowing cost at a record high, consumers cutting back on spending due to the cost-of-living crisis and rising energy costs.
The three industries most affected in the 12 months ending Q2 2023 were:
- Construction (4,276 insolvencies)
- Wholesale and Retail Trade and Repair of Vehicles (3,777 insolvencies)
- Accommodation and Food Services Activities (3,477 insolvencies).
The first of these is not unusual, since construction tends to have more quarterly insolvencies than any other industry, but it shows a fall from grace for the hospitality industry, which had enjoyed a surprising three quarters of growth up to the beginning of this year.
Whilst in the personal arena the number of individual insolvencies recorded was down on the previous quarter with an 6% decrease. The number of Debt Relief Orders was at its highest since their introduction in 2009. Bankruptcies were also on the increase but IVA’s were slightly down. Overall individual insolvencies were 15% lower than Q3 2022, but bankruptcies were 18% higher than the same period in 2022.
Xeinadin has reviewed the official statistics and Charles Brook, Director said “We are continuing to see the impact of the current economic climate on businesses. We believe that we will see corporate insolvencies remain at a higher level for some time into 2024. Hopefully, a decrease in inflation will see things improve. Although personal insolvencies had seen a decrease, bankruptcies were still high which suggests that the current cost-of-living crisis is still making an impact.”
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