R3 responds to December 2023 insolvency statistics

CAUTIOUS WELCOME: Neil Stewart, chair of R3’s Southern and Thames Valley region, responds to latest Creditsafe figures

STATS REACTION: Neil Stewart, chair of R3’s Southern and Thames Valley region, says December’s insolvency figures revealed challenging business conditions

Business insolvency figures for December revealed the true extent of tough trading conditions, says R3, the trade body for restructuring and insolvency professionals in the South and Thames Valley.

The newly published statistics for England and Wales show an increase on those for December 2022 – and a massive 79% rise compared with pre-pandemic levels in December 2019.

December’s figures took the total number of insolvencies in 2023 to 25,155 – well above 2022’s total of 22,129.

R3’s analysis of data from The Insolvency Service also showed a seasonal dip in corporate insolvencies compared with the month before, November 2023.

The latest statistics for England and Wales show:

  • Corporate insolvencies decreased by 18.9% in December 2023 to a total of 2,002 compared to November’s total of 2,470. They increased by 1.9% compared to December 2022’s figure of 1,965.
    • Corporate insolvencies also increased by 34.4% compared to December 2021’s total of 1,490 and increased by 78.9% compared to pre-pandemic levels in December 2019 (1,119).
  • Personal insolvencies decreased by 20.3% in December 2023 to a total of 6,584 compared to November’s total of 8,262, and decreased by 20.2% compared to December 2022’s figure of 8,254.

Neil Stewart, chair of R3’s Southern and Thames Valley region, said: “The corporate figures published today are the highest for December in four years and reflect the final month of a difficult year for businesses.

“December was challenging for many firms in the South and Thames Valley as they faced additional expenses at a time when margins were already tight. These won’t have been helped by consumer spending slowing and rising energy costs.

“At the end of a tough year, these extra costs, coupled with slow trade, were the final blow for some businesses and led to their directors turning to an insolvency process to resolve their firm’s financial issues.  A sign in the front window of The New Forest Butcher in Lyndhurst, which ceased trading on 13 December 2023, said as much.”

Neil, a regional associate director at insolvency litigation financing company Manolete Partners, believes that New Year can be a crunch time for businesses.

“There is usually a seasonal fall in insolvency related activity in December compared with November.

“If the New Year trading period hasn’t improved on the one before Christmas, we could see insolvency numbers continue to rise, as businesses who had banked on a festive income boost to cover the shortfall in their income turn to the insolvency and restructuring profession for help.”

The monthly fall in corporate insolvencies was due to a drop in Compulsory Liquidation, Creditors’ Voluntary Liquidation (CVL) and Administration numbers.

The year-on-year rise in corporate insolvency levels was driven by an increase in CVL numbers and a slight increase in Company Voluntary Arrangements, as the volume of businesses entering the other corporate insolvency processes fell compared to last December.

Neil said: “Our message to anyone in the South and Thames Valley who is worried about money – whether that’s yours or your business’s – is simple.

“Seek advice as soon as possible from a qualified and regulated professional the moment you start to become concerned.

“There are no guarantees, as we know from the sad news in December that despite the gallant efforts of The Jubilee Sailing Trust, it wasn’t possible to meet the ongoing monthly costs of operating their tall ships and substantial historic debts, but talking about your worries at an early stage will give you more time to take a decision about your next step and more options for moving forward.”

Most R3 members will offer a free consultation to prospective clients so they can understand more about their situation, and outline the potential solutions for resolving it.