Corporate insolvencies jump 18% in October

Corporate insolvencies increased by 17.6% in October 2023 to a total of 2,315 compared to September's total of 1,969, and increased by 18.5% compared to October 2022's figure of 1,954. According to the Insolvency Service this is higher, 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. Company insolvencies consisted of 256 compulsory liquidations, 1,889 creditors’ voluntary liquidations (CVLs), 146 administrations, 23 company voluntary arrangements (CVAs) and one receivership appointment. Meanwhile, 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 Commenting on the figures, 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.” She added: “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. “Turning to personal insolvencies, the month-on-month rise we’ve seen is down to an increase in IVA numbers, but that may well be down to the date these processes are registered with the Insolvency Service, and changes to the rules around how this process is marketed than a sudden surge in people turning to IVAs.”