The latest quarterly update on company insolvencies shows that they are at the highest level since 2009 in England and Wales. It was reported that, between July and September 2023, 6,208 companies were reported to be insolvent and a major contribution to this is believed to be the £80 billion of government backed loans that companies benefited from during the COVID-10 pandemic. With interest rates, energy bills, and staffing costs at a high we are beginning to see an increase in businesses struggling to repay these loans.
The Insolvency Service provided a breakdown to show which process of insolvency the 6,208 companies are currently in. The statistics show that Creditors’ Voluntary Liquidations are at the highest they have been since 1960. A full breakdown is provided below:
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Creditors’ Voluntary Liquidation (CVL) – 4,965;
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Compulsory Liquidation – 735;
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Administration – 466;
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Company Voluntary Arrangement (CVA) – 41; and
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Receivership Appointment – 1.
One in 191 active companies (at a rate of 52.4 per 10,000 active companies) entered insolvent liquidation between 1 October 2022 and 30 September 2023. This was an increase from the 46.9 per 10,000 active companies that entered liquidation in the 12 months ending 30 September 2022, but what does this mean for you as a business owner?
It is crucial to get ahead of financial difficulties and seek advice early in order to ensure that you are not potentially liable for failing to take every step to minimise creditors’ loss. The Insolvency Service’s Director Information Hub offers some assistance in looking for signs that your company could be in financial distress; they are:
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Cashflow problems;
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Not paying bills on time;
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Putting off tax payments;
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Being charged high interest on any loans;
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Profits are low despite high sales.
With the increasing number of companies entering insolvency proceeding, it is crucial that business owners stay alert to their company finances and seek legal advice as soon as they notice any of the above.
Our insolvency team at Farleys offer advice on these matters, whether it is concerns pre-insolvency or post-insolvency matters. To discuss your circumstances in confidence, please call 0845 287 0939 or contact us by email.
