Insolvency Stats Q4 2023

The Insolvency Service have released the latest quarterly company insolvency statistics which cover the Q4 2023 period (October to December) as well as the figures for 2023 as a whole.

The report makes for sobering reading with a total of 25,159 limited company insolvencies recorded across last year, the highest annual number since 1993. This equates to 53.7 per 10,000 active companies in the UK entering liquidation last year; this is up from 49.6 per 10,000 in 2022.

Looking at the most recent quarter, there was a 15% rise in the number of companies entering formal insolvency proceedings when compared to Q4 2022. In fact, company insolvencies in Q4 2023 were registered at the highest level since Q4 2008. These findings illustrate just how challenging the current economic climate is for UK businesses.

Company Insolvency Figures 2023

Of the 25,158 recorded company insolvencies in 2023, the breakdown by procedure was as follows:

• 20,577 Creditors’ Voluntary Liquidations (CVLs)
• 2,827 Compulsory Liquidations
• 1,567 Administrations
• 185 Company Voluntary Arrangements (CVAs)
• Two Receivership appointments

When these are compared to 2022 levels, CVLs were up by 9% surging to a new record high since records began in 1960. Compulsory liquidations were up 44%, administration appointments grew by 27%) and CVAs also recorded a significant increase of 67% on 2022 numbers.

These figures show the rising levels of company insolvencies – across all processes – in 2023. With the Cost of Living crisis showing no sign of abating, companies may have to brace themselves for further challenging times as we enter 2024.

“The latest figures from the Insolvency Service paint a worrying picture as to the financial and operational state of companies across the country,” says Shaun Barton, Partner at Real Business Rescue.”

“25,159 limited company insolvencies were recorded last year, a figure which is the highest since way back in 1993. This startling number is the equivalent of 53.7 of every 10,000 active companies in the UK entering liquidation at some point in 2023. While these figures are the largest we have seen for some time, in many ways, they should not come as a shock. The pressures which have been placed on companies since the start of the Covid-19 pandemic have been relentless – cumulating in an ongoing Cost of Living crisis which is denting consumer confidence and putting the brakes on spending across the board.”

Sectors in Distress

According to the latest Insolvency Service statistics, most sectors have seen year-on-year increases in the number of insolvency procedures entered into. In fact, figures show that all of the large industries analysed reported an increase in the number of insolvencies in 2023 compared to 2022.

Some industries have been harder hit than others. The report highlights five industries which endured the highest number of insolvencies in England and Wales last year:

1.       Construction - 4,371 registered insolvencies (18% of all insolvencies where industry details have been captured)

2.       Wholesale and retail trade; repair of motor vehicles and motorcycles - 3,929 registered insolvencies (16% of all insolvencies where industry details have been captured)

3.       Accommodation and food service activities - 3,727 registered insolvencies (15% of all insolvencies where industry details have been captured)

4.       Administrative and support service activities - 2,299 registered insolvencies (9% of all insolvencies where industry details have been captured)

5.       Professional, scientific and technical activities - 2,001 registered insolvencies (8% of all insolvencies where industry details have been captured)

“With barely any sector faring better in 2023 than they did in 2022, this represents a problem across the whole spectrum of businesses, affecting both large and small entities, across a huge swath of industries,” comments Shaun Barton.

Insolvencies by Region

From a regional perspective, insolvencies in England and Wales as well as Northern Ireland registered double digit increases. The picture was more positive in Scotland which saw rates of company insolvency remain constant when compared to the same quarter last year. With 314 total company insolvencies registered in Scotland in Q4 2023, this was just one more than in Q4 2022.

“The Q4 2023 data from the Insolvency Service highlight that the effects of today’s uncertain economic outlook and challenging operating landscape on businesses should not be underestimated. An increase in interest rates has led to rising commercial rent costs, soaring borrowing costs, and a dampening on discretionary spending from customers. Added to this the effect of inflation, the huge cost of gas and electricity, and a shortage of labour and talent, the obstacles facing businesses across the country seem never ending.”

“While the challenges being experienced across almost every sector imaginable are significant, this does not mean they are insurmountable. There are a range of recovery and restructuring options available to limited companies which, if implemented correctly, can effect the successful turnaround of an ailing business. The key is to take professional advice at the early stages of impending insolvency; this will increase the number of options open to you and improve your chances of getting your company back on a solid financial footing.”