Company insolvencies surge as rising costs bite

The number of registered companies in England and Wales going insolvent was 21% higher in November than a year ago, according to the latest data from The Insolvency Service. There were 2,029 company insolvencies in November across England and Wales, against 1,676 in November 2021. The statistics also showed there were 290 compulsory liquidations last month, five times more than in November 2021.

David Kelly, head of insolvency at PwC, said: “This is a sobering reminder that rising interest rates, energy costs and supply chain issues are starting to bite as we head into 2023. Vulnerable sectors, such as retail, hospitality and construction, are particularly feeling the strain, notwithstanding the brief respite the World Cup afforded a number of businesses in the hospitality sector.

“The decline in consumer sentiment coupled with high costs of raw materials, energy and labour will prove hugely challenging for businesses in these sectors going forward, so it’s vital that they look at things like refinancing and restructuring in order to put themselves in the best position to offset external pressures. Ongoing industrial action has also been adding to the pressures, especially for the retail and hospitality sectors over the important Christmas spending season.”

Catherine Atkinson, director in PwC’s restructuring and insolvency team, added: “The data reinforces our recent analysis of November’s winding up petitions which are a key bellwether of creditor sentiment. Last month there were 474 petitions in total – almost four times as many as November 2021 where there were only 120. In the first 11 months of 2022 we have already seen 2,990 – a stark contrast to 2021 where there were 825 for the entire year.

“While this news indeed looks gloomy, it’s important to remember that many businesses have shown extraordinary resilience over the past few years and, as such, have already been preparing themselves for a very difficult winter period and beyond. It’s vital that they continue to consult early with key stakeholders including lenders, suppliers, landlords and HMRC; and act now to preserve cash, assess their financial position and ensure that they have a clear view of their forecasts as we continue to navigate choppy waters.”

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