UK company insolvencies rise to highest levels since the 2008 financial crisis

The October 2023 insolvency statistics show that company insolvencies have risen by 17.6% from October 2022 to October 2023 and by 56.7% since pre-pandemic levels in October 2019. Total insolvencies have reached the highest levels since 2009.

The steep rise in insolvencies since the conclusion of the government's Covid-19 support schemes has been fuelled by continued high interest rates, inflation, increased energy costs, supply chain stresses and weaker consumer confidence. The rise in insolvencies applies across all corporate insolvency processes. Company voluntary liquidations are up 19% year on year suggesting directors are increasingly closing businesses due to a lack of financial viability. Other insolvency procedures are also on the rise with administrations up 36% in addition to a fourfold increase in company voluntary arrangements.

What lies ahead

With a significant number of companies already in distress and no obvious signs that the macro-economic environment will improve for businesses, it is likely we will see company insolvencies continue to rise.  However, the true level of underlying distress is yet to be revealed because lenders faced with companies struggling to pay their debts will be hesitant to enforce their rights if the assets which could be sold to repay the lender are now worth less than previously thought.  It may take many months before the true level of financial distress is reflected in the insolvency statistics.

Find out more

Directors should be alert to signs of financial distress and seek advice early if their business may be at risk of insolvency.

To discuss the issues raised in this article in more detail, please reach out to a member of our Restructuring & Insolvency team.