Insolvencies – The UK goes broke
The UK public goes broke.
It’s true; the UK public are suffering. There are people who can’t heat their homes this winter. The cost-of-living crisis can be felt, and seen across the nation. In just one year, shopping prices have risen by a massive 9.6% (vs Oct 2022). And yet, wages do not reflect this amount.
The public has less money. What is happening to businesses who thrive on luxury or already previously costly purchases? New kitchen anyone? No..? Traders such as carpenters, plumbers, tilers, flooring layers, who need the public and sell business to business to business are struggling to buy materials, let alone pay each other – so what happens to these companies?
Insolvency.
What is insolvency?
Insolvency as defined by Cambridge Dictionary: the condition of not having enough money to pay debts, buy goods, etc. If a business can’t supply their customers, or pay their bills, they simply can’t trade any longer.
Insolvency statistics.
Now, keep in mind all the above. We have a nation with less to no spare money, and prices have risen drastically.
Let’s a brief look at insolvencies across the board from 10 years ago, 1 year ago, and October 2023 (written 24th November 2023).
November 2013: In the calendar year 2013, there were 3,859 other corporate insolvencies, comprising 917 receiverships, 2,365 administrations and 577 company voluntary arrangements.
November 2022: The number of registered company insolvencies in November 2022 was 2,029: 21% higher than in the same month in the previous year (1,676 in November 2021).
October 2023: There were 2,315 registered company insolvencies, which were broken down into:
- 1,889 CVLs, which is 19% higher than in October 2022.
- 256 were compulsory liquidations, which is 2% higher than October 2022.
- 23 were CVAs, which is over 4 times higher than in October 2022.
- There were 146 administrations, which is 36% higher than October 2022.
- There was one receivership appointment.
What is most interesting, the details for November 2013, are for the whole year of 2013. And yet, the other two are solely for that month.
Insolvencies in the UK is at an all-time high, in fact, it’s being compared to the financial crisis of 2008/2009.
From insolvency to administration.
Sometimes, by the skin on their teeth, businesses can pull themselves out of insolvency. In other times businesses are placed into administration. When a company goes or is placed into administration there is no turning back, they have entered a legal process under the Insolvency Act 1986.
The administrator appointed will try to be as fair as possible with creditors, whilst the business continues to trade to pay off as many debts as possible before the doors never open again. However, there is nothing stopping the owner opening a new business in a different trading name.
Light on the horizon.
We would like to say congratulations to SME’s out there facing these challenges daily.
Congratulations to all the businesses who have survived these times.
Congratulations to all those who evolved their businesses to adapt to different challenges.
Our biggest congratulations goes to those SME’s who were brave enough to close, and start afresh.
There is light on the horizon, producer input prices fell by 2.6% in the year to October 2023.
We will recover.
