- Insolvencies for Q1 2023 up 18% on 2022
- Construction and retail sectors worst hit
- Rising energy costs put retail, hospitality, hotels, restaurants, and manufacturing sectors at risk of insolvency
- PKF GM urge businesses to seek help early.
Corporate insolvencies surge
The latest Government insolvency statistics for the first quarter of 2023 show a significant increase in the number of companies in distress compared to the same quarter last year.
Quarterly insolvency statistics for January to March (Q1) 2023 show that there were 5747 registered company insolvencies comprising 4,739 creditors’ voluntary liquidations (CVLs), 652 compulsory liquidations, 318 administrations and 38 company voluntary arrangements (CVAs). This is 18% higher than the same quarter last year.
Industry view
The three industries that experienced the highest number of insolvencies in this quarter were:
- Construction (4,165, 19% of cases)
- Wholesale and retail trade; repair of motor vehicles and motorcycles (3,518, 16%)
- Accommodation and food service activities (2,951, 13%)
- These were also the three sectors with the most insolvencies in the 12 months ending Q4 2022.
Leading restructuring and insolvency professional, Oliver Collinge from PKF GM in Leeds said:
“The large rise in corporate insolvency numbers is not surprising nor the industry sectors most impacted, given the cost of living crisis. High interest rates, persistent inflation, ongoing supply chain challenges and weak consumer confidence continue to provide real challenges for many businesses.
“The Government’s Energy Bill Relief Scheme came to an end last month meaning many businesses will be facing further increases in costs at a time when they can ill-afford them. Sectors with a high level of energy consumption such as retail, hospitality, leisure and manufacturing will be particularly at risk.”
Tsunami of insolvencies predicted in the second half of 2023
Oliver continued:
“The current headwinds will create challenges even for some better-performing businesses during the second half of 2023, not only those that were already in survival mode and the pressure on cash will continue. Unfortunately, we expect to see a significant increase in business failures for some time to come.”
“It’s critical businesses act early and seek advice if they are struggling now or think cash flow may be squeezed in the coming months. The earlier they act, the more options they’ll have to secure the business’s long-term survival.”
