15 August 2023
The number of registered company insolvencies in July 2023 was 1,727 – a 6% decrease from the same month last year (1,831 in July 2022) according to new figures.
This is still well above the pre-covid long term historic average. However, the latest figures suggest that the level of shut down CVLs which are predominantly seen amongst smaller companies, may have peaked in the last six months, and is now starting to fall.
There were 248 compulsory liquidations in July 2023, up 81% year-on-year. Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.
The number of Creditors’ Voluntary Liquidations (CVLs) in July was 17% lower than in July 2022 and 24% lower than the last month (June 2023). By contrast the number of administrations and Company Voluntary Arrangements (CVA’s) which are rescue procedures which tend to be used by larger companies have increased by 53% and 280% from July 2022.
Commenting on the latest figures, Lindsey Cooper, partner at RSM UK Restructuring Advisory, said: ‘These figures are not unexpected and are in line with our predictions. The fall in CVL numbers reflects the fact that many of the insolvencies at the smaller end are being flushed out of the system. The significant increase in administration and CVA numbers shows that larger companies, many of whom have high levels of debt and up until now have been able to withstand the economic and financial challenges, are now having to deal with the impact of high interest rates, as well as the continuing sticky inflation around wages.
‘However, it should be remembered that unlike CVLs, in most instances the administration and CVA processes do allow businesses to be preserved and jobs to be saved.’