R3 responds to August 2023 insolvency statistics

15 September 2023

• Corporate insolvencies increased by 33.6% in August 2023 to a total of 2,308 compared to July's total of 1,728, and increased by 18.9% compared to August 2022's figure of 1,941.
  • Corporate insolvencies increased by 71.3% from August 2021's total of 1,347 and by 69.1% compared to pre-pandemic levels in August 2019 (1,365).

• Personal insolvencies increased by 3% in August 2023 to a total of 8,536 compared to July's total of 8,290, and decreased by 10.9% compared to August 2022's figure of 9,584.
  • Personal insolvencies decreased by 6.4% from August 2021's total of 9,117 and decreased by 4.2% compared to pre-pandemic levels in June 2019 (8,910).

Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body, responds to the publication of the August 2023 personal and corporate insolvency statistics for England and Wales:

“August’s corporate insolvency figures were their highest for this month in four years as a mixture of long-term economic issues, director fatigue and creditor pressure saw more companies enter an insolvency process in an attempt to resolve their financial issues or 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.

“August’s administrations figures were the highest monthly figure we’ve seen since January 2019, which is a sign that more and more businesses are at a point where they are in need of specialist help to survive – and that a sale or a liquidation may be their only options.

“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 the picture will improve in the near future as people and businesses face the prospect of increased energy bills, and people start watching their spending even more closely.

“Our message to directors 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.

“Turning to personal insolvencies, while numbers rose month-on-month, driven by a monthly rise in Individual Voluntary Arrangement numbers and Debt Relief Orders reaching a six-month high, the total figures still fell compared to one, two and four years ago.

“This suggests that while the cost-of-living crisis is leading to more people seeking help from the insolvency profession with their financial issues, it’s more of short-term help – the kind which doesn’t require the sale of major assets. 

“Despite this, money matters are still a major worry for many. People are concerned about their finances, the future of the economy, and the cost of housing, energy and groceries. Other worries include job security, and how they’ll manage their money as the year goes on.

“All the signs point to more people needing some form of financial help in the future, and this could result in an increase in the number of individuals turning to a personal insolvency process to resolve their financial issues.

“We know how hard it is to talk about your money worries, but having that conversation is a critical step to finding a solution. Being brave and seeking advice when your worries are new nearly always leads to better outcomes than if you’d waited until the problem got worse, and it gives you more options for improving your situation and more time to consider how you move forward.

“Most R3 members will offer a free consultation to potential clients so they can learn more about the challenges they face with their finances, and outline the potential options for improving them.”