Insolvency and Asset Recovery partner Tim Symes appeared on Sky News’ Business Live with Ian King as the latest government figures revealed that company and individual insolvencies in England and Wales remain close to an all time high.
On individual and corporate insolvencies, Tim suggested that the figures are unlikely to get better soon even as inflation continues to fall, with a “lag before we see a recovery” likely in the company failure statistics.
You can watch Tim’s interview here (Twitter login required). The interview starts at 2:00.
Tim commented that the business community faces stresses from multiple angles, including a “three pronged attack” of high interest rates, inflation and energy prices. He pointed out that HMRC has returned to taking a more ‘typical’ stance after its more benevolent approach during the pandemic, enforcing 40% of the compulsory liquidations month-on-month.
With borrowing now also more expensive for banks, Tim said that while they could afford to forebear they will have to start to “become more bullish with companies to protect their own balance sheets.”
Ian King acknowledged that numerous businesses which have been able to service their debts but never repay them have been blamed for weak productivity in the UK, and questioned whether these would remain sustainable. Agreeing that these companies were unlikely to remain viable, Tim said that only government measures during the Covid lockdowns had kept many of them in business and that these failures were now becoming inevitable.
While the two agreed that a certain level of corporate failures was necessary for a healthy life cycle across the wider economy, Tim concluded overall with the point that businesses do also need other businesses.
June insolvency statistics
The Insolvency Service’s monthly statistics for June 2023 showed that:
- The number of registered company insolvencies was 2,163, 27% higher than in the same month in the previous year (1,698 in June 2022). This was higher than levels seen while the Government support measures were in place in response to the coronavirus (COVID-19) pandemic and also higher than pre-pandemic numbers.
- There were 260 compulsory liquidations in June, 77% higher than in June 2022. 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.
- There were 1,759 Creditors’ Voluntary Liquidations (CVLs), 21% higher than in June 2022.
- There were 130 administrations, 44% higher than in June 2022.
- There were 14 Company Voluntary Arrangements (CVAs), 75% higher than in June 2022.
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