R3 in the North West responds to December 2023 insolvency statistics

Corporate insolvencies rose by 1.9% year-on-year in December 2023, and rose by 78.9% when compared to pre-pandemic levels in 2019, according to figures published today by the Insolvency Service.

• Corporate insolvencies decreased by 18.9% in December 2023 to a total of 2,002 compared to November's total of 2,470, and increased by 1.9% compared to December 2022's figure of 1,965.
• Corporate insolvencies also increased by 34.4% compared to December 2021's total of 1,490 and increased by 78.9% compared to pre-pandemic levels in December 2019 (1,119).
• Personal insolvencies decreased by 20.3% in December 2023 to a total of 6,584 compared to November's total of 8,262, and decreased by 20.2% compared to December 2022's figure of 8,254.
• Personal insolvencies also decreased by 22.1% compared to December 2021's total of 8,453 and decreased by 21.7% compared to pre-pandemic levels in December 2019 (8,405).

Fran Henshaw, North West chair of R3, the UK’s insolvency and restructuring trade body, comments on the publication of the December 2023 corporate and personal insolvency statistics for England and Wales: “The monthly fall in corporate insolvencies is due to a drop in Compulsory Liquidation, Creditors’ Voluntary Liquidation (CVL) and Administration numbers, while the year-on-year rise in corporate insolvency levels is driven by an increase in CVL numbers and a slight increase in Company Voluntary Arrangements, as the volume of businesses entering the other corporate insolvency processes fell compared to last December.

“The figures published today are the highest for December in four years and reflect the final month of a difficult year for businesses in England and Wales. December was tough for many firms as they faced additional expenses at a time when margins were already tight. These won’t have been helped by consumer spending slowing and rising energy costs.

“At the end of a tough year, these extra costs could have been the final blow for many businesses and may have led to their directors turning to an insolvency process to resolve their firm’s financial issues.

“If the New Year trading period hasn’t improved on the one before Christmas, we could see insolvency numbers continue to rise, as businesses who had banked on a festive income boost to cover the shortfall in their income turn to the profession for help.”

Fran, who is head of corporate recovery and insolvency at Beever and Struthers, continues: “When it comes to personal insolvencies, the monthly fall in numbers is due to fewer people entering all three of the main personal insolvency processes, while a reduction in Individual Voluntary Arrangement numbers is behind the year-on-year fall in figures.

“However, the year-on-year increase in the number of people entering a Breathing Space suggests that demands for debt support are still high, but that people aren’t reaching the point where they need formal personal insolvency support.

“December is always a difficult month financially – and this one was no different. Many people were considering cutting their spending back to pay for Christmas, or had already saved or considered borrowing money to pay for it.

“As we head into the spring, it’s likely that energy costs will continue to be a concern for many people with an increase in price caps from this month and government support coming to an end for many from next month.

“While food inflation and the price of petrol has been falling, events developing in the Middle East are likely to lead to renewed upward pressure on prices and could delay interest rate cuts. Combined, these factors could see insolvencies rise next month if these ongoing expenses become too much to manage.

“Our message to anyone in the North West who is worried about money – whether that’s yours or your business’s – is simple: seek advice as soon as possible – the moment you start to become concerned. We know it’s a hard conversation to have, let alone start, but talking about your worries at an early stage will give you more time to take a decision about your next step and more potential options for moving forward.

“Most R3 members in the North West will offer a free consultation to prospective clients so they can understand more about their situation, and outline the potential solutions for resolving it.”