The monthly report by the Insolvency Service is an invaluable resource, providing crucial information on individuals and businesses facing financial difficulties and undergoing insolvency proceedings.
In October 2023, the number of registered company insolvencies increased by 18% to 2,315 compared to the same month in the previous year (1,954 in October 2022). This number is higher than pre-pandemic levels and those seen during the Government's COVID-19 support measures.
Of the 2,315 registered company insolvencies in October 2023:
The increase in company insolvencies was driven mostly by CVLs, while compulsory liquidation and administration numbers increased from historically low numbers seen during and immediately after the pandemic, returning to close to 2019 levels.
Figure 1: The number of registered company insolvencies in October 2023 was higher than in the same month last year, driven mostly by a higher number of CVLs.
In October 2023, the total number of insolvencies for individuals was 9,881, a 6% decrease from the same month in the previous year (10,528 insolvencies in October 2022).
The individual insolvencies consisted of:
In November 2023, there were 703 bankruptcies, consisting of 553 debtor applications and 150 creditor petitions. Compared to October 2022, bankruptcies had increased by 28%, with debtor applications rising by 18% and creditor petitions surging by 90%. Although bankruptcy numbers in 2023 were higher than the same months in 2022, they remained below the levels seen before 2020.
There were 3,245 DROs in October 2023, 71% higher than in October 2022. DRO numbers were volatile in early 2023 when new DRO hubs were introduced, and they are now higher than pre-2020 levels.
There were 5,933 IVAs registered in October 2023, 27% lower than in October 2022. IVA numbers in 2023 have been lower than the record-high numbers in 2022.
In October 2023, the number of individual insolvencies was lower compared to the same month in 2022. The decrease was mainly due to a 27% decline in IVAs. In 2023, IVA numbers have been consistently lower than the record-high figures of 2022. On the other hand, the numbers of DROs and bankruptcies were higher than last year's figures. Specifically, DROs in October 2023 were 71% higher than in October 2022. However, it's worth noting that the number of bankruptcies was still below the levels before 2020.
Figure 2: IVA numbers so far in 2023 have been lower than the record-high numbers in 2022. Bankruptcy and DRO numbers were higher in October 2023 than in the same period last year.
Source: Insolvency Service
Dan Hancocks, CoCredo, MD, says: Businesses face multiple challenges in all directions. Costs are increasing, requests for higher wages are mounting, and consumers are cutting back on their spending as we approach winter, prioritising saving and ensuring they have enough for necessities. The upcoming Christmas trading period holds the potential to bring a much-needed boost to businesses' income. However, if it fails to do so, we might witness an increase in insolvencies in the new year. It's impossible to predict whether this period will be a game-changer or the final nail in the coffin for struggling firms.
“It is crucial for directors to stay vigilant and recognise the early signs of financial distress. These signs might include cash flow issues, unsold inventory, and difficulties paying rent, taxes, or suppliers. Acting on these signs as soon as possible before they worsen is essential. Acting early gives the business a better chance of success, as it can explore a broader range of potential solutions.”
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