Corporate insolvencies at its highest in three years

This three-year peak – primarily driven by the 2,011 creditors’ voluntary liquidations (CVLs) to have taken place – was also 16% higher than during same month in 2022 and a 145.9% increase on figures seen March 2021.  

Along with the nine percent increase in CVLs, the number of compulsory liquidations, administrations and company voluntary arrangements were also higher than in March 2022. The increase specifically in the number of compulsory liquidations was partly as a result of an increase in winding-up petitions.  

Responding to these figures, R3 president Christina Fitzgerald said: “Business owners have spent three years trading through a pandemic and economic uncertainty, and an increasing number are choosing to shut their businesses before that choice is taken away from them and as the turbulent trading climate proves too much. 

“Businesses across Britain are struggling at the moment. Costs continue to rise at a time when consumers are cutting back on discretionary spending, and when staff are requesting pay rises to cover their bills. With the government’s Energy Bill Relief Scheme ending at the end of March, many businesses will be facing further increases in costs at a time when they can ill-afford them.  

“Directors need to be vigilant about the signs of financial distress and seek advice as soon as they spot issues with their business or begin to worry about its finances. If stock is starting to pile up, cashflow is an issue, or the business is having problems paying rent, staff or suppliers, now is the time to seek advice, rather than further down the line when these issues have evolved into problems.” 

Mark Supperstone, managing director at ReSolve, says these figures show many business owners are still being challenged by rising costs and economic uncertainty. He added: “Last month’s budget was a great opportunity for new policies to be introduced to help businesses survive and these figures prove the need for such government action in the immediate term.  

“Sadly, these figures are expected and align with what we are seeing at ReSolve, with construction, retail and food service being amongst the sectors with the highest number of insolvencies. We’re also seeing an increase in restructuring work with many medium-sized businesses struggling with the increased cost of debt, rising costs and squeezed margins.  

“However, there is optimism amongst many business owners who are anticipating improving conditions as the year progresses.” 

As for personal insolvencies, this increased by 38.9% month-on-month to a total of 11,438 in England and Wales – however, this decreased by one percent year-on-year when compared to March 2022.  

Of this 11,438 figure, 672 were bankruptcies and 3,383 were debt relief orders (DROs) – both higher than what was seen in March 2022, while there were – on average – 6,100 individual voluntary arrangements (IVAs) registered a month in the three-month period ending in March 2023, 14% lower than the same period in 2022.  

The significant increase in IVA and DRO numbers – according to Fitzgerald – suggests the cost-of-living crisis is impacting on people’s solvency, but that a greater number are coming to an arrangement with their creditors without requiring a bankruptcy process.  

She added: “Many people are concerned about their finances at the moment. As cost-of-living continues to be a serious issue, people are cutting back on discretionary spending and are less likely to make major purchases as they save their money for the basics. 

“With the cost of food and energy continuing to be a concern, people are worried about their finances, inflation and interest rate rises. Consumer borrowing is increasing as more people turn credit to help ease the strain on their finances and with the cost of debt on the rise it is no surprise that last week several UK lenders reported a rise in household defaults.” 

Turning to company insolvencies Scotland, 104 were registered in the country in total – 21% higher than the number in March 2022. This figure was comprised of 61 CVLs, 40 compulsory liquidations, two administrations and one receivership appointment.  

Additionally, between 26 June 2020 and 31 March 2023, no moratoriums were obtained, and two companies had a restructuring plan registered at Companies House.  

In Northern Ireland, 12 company insolvencies were registered – 40% lower than in March 2022, with this being comprised of eight CVLs, two compulsory liquidations and two administrations. As for individual insolvencies, 176 took place – one percent more year-on-year – consisting of 131 IVAs, 27 DROs and 18 bankruptcies.