R3 responds to October 2023 insolvency statistics

14 November 2023

• Corporate insolvencies increased by 17.6% in October 2023 to a total of 2,315 compared to September's total of 1,969, and increased by 18.5% compared to October 2022's figure of 1,954. 
• Corporate insolvencies increased by 64.2% from October 2021's total of 1,410 and by 56.7% from pre-pandemic levels in October 2019 (1,477). 
• Personal insolvencies increased by 35.7% in October 2023 to a total of 9,881 compared to September's total of 7,280, and decreased by 6.1% compared to October 2022's figure of 10,528. 
• Personal insolvencies increased by 2.1% from October 2021's total of 9,682 and decreased by 1.7% from pre-pandemic levels in October 2019 (10,056).

Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body, comments on the publication of the October 2023 corporate and personal insolvency statistics:

“Firms have been battling economic issues for three and a half years now, and corporate insolvency numbers are rising as more and more directors run out of options. The figures published today show that Creditors’ Voluntary Liquidations and Administrations are at the highest levels we’ve seen in October in more than four years, and this reflects the tough trading climate and the level of director fatigue among the business community in England and Wales.

“Businesses are being battered from all sides. Costs have increased, demands for wages are incoming and people are spending less as they look to save ahead of the winter and to make sure they have enough left to cover the basics. If the Christmas trading period doesn’t bring a wave of new income, we could see insolvencies continue to rise in the new year, and at the moment, it’s impossible to predict whether this will be a badly needed boost or the final blow for struggling firms.

“In these kinds of circumstances, it’s critical that directors are alert to the signs of financial distress, and act if any of them present themselves. Cashflow problems, stock piling up and issues paying rent, taxes or suppliers are all signs that a business is distressed and need to be acted upon before they get any worse – and while the business has as wide a range of potential solutions open to it as possible.

“Turning to personal insolvencies, the month-on-month rise we’ve seen is down to an increase in IVA numbers, but that may well be down to the date these processes are registered with the Insolvency Service, and changes to the rules around how this process is marketed than a sudden surge in people turning to IVAs.

“Of more interest is the fact that Debt Relief Order numbers are at a four-year high – partly because it illustrates that the change in threshold has led to more people entering this process, but also because the rise in numbers, coupled with Bankruptcy numbers reaching their highest level since June 2021, show there is a demand for personal insolvency support due to the cost of living crisis.

“Despite the fact that personal insolvencies are below pre-pandemic levels, household finances remain tightly squeezed. Although food inflation has fallen, prices remain higher than they were a year ago, and this, coupled with the costs of fuel and energy are a major worry for individuals and a strain on personal finances.

“These issues, coupled with concerns about the economy, and rising prices mean people are cutting their spending back to the bone and looking for any opportunities to save money. This is likely to increase as winter sets in, as people save for Christmas and to make sure they can cover their heating and food costs.

“We urge anyone who is worried about their finances – whether those are personal or business – to seek advice as soon as possible. We know it’s a very hard conversation to have, but voicing your concerns while they are new will give you more options and more time to take a decision about your next step. Most R3 members will give prospective clients a free consultation so they can learn more about their situation and outline the potential solutions open to them for resolving it.”