A perfect storm of economic issues has led to the highest Q3 corporate insolvency figures in more than two decades, with a combination of rising costs, director fatigue and increased creditor pressure meaning more firms are now turning to a corporate insolvency process to resolve their financial issues.
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 there were 6,208 seasonally adjusted corporate insolvencies in the third quarter of 2023, which is a 10.2% increase on the 5,635 in Q3 2022 and 54.8% higher than the 4,010 in Q3 2021. The Q3 2023 figure is also 41.3% higher than the Q3 2019 pre-pandemic figure of 4,393.
R3 Midlands chair Stephen Rome said: “The key driver behind the numbers is the rise in Creditors’ Voluntary Liquidations, which have reached their second highest figure on record and the highest number ever recorded in Q3.
“After years of battling through the pandemic, supply chain issues, increasing costs, rising inflation and requests for higher wages, many directors have simply had enough and are calling it a day while that choice is still theirs.
“Compulsory liquidation numbers have reached a four year high – partly because of legislation preventing them and then making the winding-up petition threshold higher in the aftermath of the pandemic, but also because these firms are now under their own pressures and are calling in debts in the hope of balancing their own books.
“Trading conditions are particularly tough right now, with the upcoming Christmas period a crucial time for a large number of firms. This year could be make or break for many local businesses, especially those in retail and hospitality.
“Our message to anyone who is worried about their personal or business finances is to seek advice as soon possible. We know that it can be a hard conversation to have, but speaking to a qualified advisor when worries are in their early stages can provide more potential options for resolving them than waiting for the problem to worsen.
“Most R3 members will give a free initial consultation to prospective clients so they can learn more about their situation and outline the potential options for resolving it.”
