UK insolvencies skyrocket to 30-year high in ‘striking’ reminder of ‘onerous’ environment

The number of company insolvencies has soared to its highest level since 1993, as voluntary liquidations reached the most since records began in 1960.

The Office for National Statistics revealed today that throughout 2023, there were over 25,000 company insolvencies, with every category of insolvency rising compared to the year before.

Mark Ford, partner in restructuring and recovery services at Evelyn Partners, described the figure as “striking” and a stark reminder of how “onerous” the trading environment for businesses is.

However, the record is in absolute terms: As a proportion of registered companies, the rate is 53.7 per 10,000 firms, compared to a peak of 94.8 in the 2008 global financial crisis.

Among the categories of insolvency, the final quarter saw creditors voluntary liquidations (CVLs) reach 20,577, the highest since records began.

“It would appear that [firms] are concluding that the game is up with the combination of legacy debt from the COVID pandemic and facing very strong financial headwinds and global uncertainty, with little or no value left within these companies and no prospect of a business rescue,” said Ford.

“Whilst the uptick in insolvencies has been largely driven by smaller businesses and CVLs, we are now starting to see stress spread to some mid-market and larger companies, many of which are facing refinancing hurdles as well as ongoing inflationary challenges,” added Simon Edel, UK turnaround and restructuring strategy partner at EY-Parthenon.

Daniel Staunton, senior associate at law firm Kingsley Napley, predicted that numbers would continue to rise into 2024, as “the number of companies going insolvent just keep on rising”.

“Whilst some companies may have caught a breath from busy Christmas trading and huff and puff into February, more will splutter out in Q2,” he added. “We may well see inflation creep back up again and the Bank of England pressured to act on the base rate.”