The number of insolvent businesses in England and Wales has risen by over a third (33.6%) to hit a four-year high, with company directors heavily impacted by a mixture of long-term economic issues, director fatigue and creditor pressure.
This is according to the Midlands branch of insolvency and restructuring body R3 and follows latest statistics published by the Insolvency Service which show that corporate insolvencies rose by 33.6% in August to 2,308 compared to July’s total of 1,728, and by 18.9% in comparison with August 2022’s figure of 1,941.
The government statistics also show that corporate insolvencies in England and Wales increased by 71.3% against August 2021’s total of 1,347, and by 69.1% compared to the pre-pandemic level of 1,365 in August 2019.
R3 Midlands chair Stephen Rome, a director at law firm Thursfields in the region, said: “August’s corporate insolvency figures were their highest for this month in four years as increasing numbers of companies enter an insolvency process in an attempt to resolve their financial issues, or simply shut their doors.
“Creditors’ Voluntary Liquidations remain high as more and more directors choose to wind down their firms, while compulsory liquidation numbers were at their highest this August for four years as creditors continue to pursue the money they are owed.
“The sad fact is that businesses are being hit from a variety of angles – and all these blows have an effect on their bottom line. Cost inflation has been a problem for some time and, while this is expected to ease, it is still sitting higher than many had predicted.
“As a result of this, upward pressure on pay is continuing, while recruitment is a challenge, and people are still cautious about spending money on anything other than the essentials.
“It’s unlikely that the picture will improve in the near future as people and businesses face the prospect of increased energy bills and start watching their spending even more closely.
“Our message to directors, therefore, is simple: be alert to signs your business could be financially distressed and seek advice as soon as they show themselves. If you’re having problems paying wages, staff or suppliers, if stock is starting to pile up, or if you’re worried about your business and its finances, that’s the time to speak to a qualified advisor.”
