Corporate insolvencies decreased by 6.4% in May 2024 to a total of 2,006 compared to April’s total of 2,144, and decreased by 21.2% compared to May 2023’s figure of 2,547.
Corporate insolvencies increased by 5.8% from May 2022’s total of 1,896 and increased by 48.8% compared to pre-pandemic levels in May 2019 (1,348).
Personal insolvencies decreased by 3.5% in May 2024 to a total of 9,266 compared to April’s total of 9,605, and increased by 2.9% compared to May 2023’s figure of 9,003.
Personal insolvencies decreased by 7.2% from May 2022’s total of 9,986 and decreased by 15.7% compared to pre-pandemic levels in May 2019 (10,989).
Dave Broadbent, chair of the UK’s insolvency and restructuring trade body R3 in Yorkshire, and partner at Begbies Traynor in York and Teesside, comments on the release of the May 2024 corporate and personal insolvency statistics for England and Wales:
“The month-on-month fall in corporate insolvencies is driven by lower numbers of Administrations, Compulsory Liquidations and Creditors’ Voluntary Liquidations (CVLs), while the reduction in numbers we’ve seen compared to May 2023 is mainly driven by a fall in Administrations and CVLs. However, levels of corporate insolvency are still higher this month than they were in May 2019, and this is because CVL levels are higher – significantly higher – now than they were then, as a greater number of directors are closing their businesses after four tough years of trading during and post-pandemic.
“The business climate remains challenging due to a variety of short and long-term issues. Inflation levels, cautious consumer spending, and the costs of energy and fuel have been affecting businesses for months, while shorter-term issues like the rain we experienced in April and May will have hit firms in the construction, retail and hospitality sectors.
“Retail and hospitality will have seen a lower footfall as a result of the wet weather over the last couple of months, and this will have been another blow after a tough start to the year, a poor Christmas trading period and the longer-term impact of people spending less. However, these industries will be hopeful the Euros will bring an increase in footfall and spending in England and Scotland, which may help make up for a slow start to the year.
“The rain will have also caused delays and disruption to construction projects, which will create additional issues for a sector that had seen a reduction in new work at the end of last year and the start of this one.
“Another factor affecting businesses is the wait for the Monetary Policy Committee’s decision on the Bank Rate of interest as the impact this announcement has on everything from leasehold agreements to foreign exchange rates may have resulted on firms choosing to enter or choosing to delay entering an insolvency or restructuring process depending on the timings of their current arrangements. The Committee’s decision is also likely to affect businesses in the future, given the impact it has on a range of areas of commercial and international finance.
“When it comes to trends in insolvency and restructuring over the next couple of months, I would expect the liquidation numbers to soften slightly, and mid-market businesses to look towards exploring their options for Restructuring Plans as the recent ruling on Tasty plc’s proposals will potentially open up the market for this process to firms of this size, but with low market expectation of an interest rate cut before the August Monetary Policy Committee sitting at the earliest, it could be a slow summer for restructurings.
“Despite the challenges businesses face and the uncertain political and economic climate, they are generally more optimistic about the coming months, and many expect output and sales levels to rise and are planning to recruit extra staff. With the economy growing in the first quarter of this year and predicted to grow again in the next quarter, the tide may be about to turn for the better.
“Turning to personal insolvencies, the month-on-month fall in numbers is due to fewer people entering a Bankruptcy and Individual Voluntary Arrangement (IVA) last month, while the annual increase in personal insolvency numbers is due to a rise in Debt Relief Orders after the entry fee for this process was removed in April of this year. Personal insolvency numbers are lower than they were in April 2019, and this is due to fall in Bankruptcies and IVAs.
“The number of people entering a Breathing Space has also increased slightly compared to last month, and it’s clear that there is still ongoing demand for debt support in England and Wales, but that people are increasingly entering processes like DROs that allow them to come to an arrangement with their creditors, or like the Breathing Space, which allows them a respite from creditor pressure while they attempt to find a solution to their financial issues.
“It’s also clear the cost of living is continuing to hit consumers. Paying for the essentials remains a challenge as food, fuel and energy prices continue to rise, and while inflation is coming down and the energy price cap is set to fall from July, costs still remain high for households, with energy prices well above what they were three years ago. As a result, people are still looking to save money – either to meet ongoing costs or to spend later on in the year.
“We urge anyone who is worried about their finances to seek advice as soon as possible. We know how challenging it is to talk about your money worries, but taking that step and starting that conversation when the problem is new will give you more options for resolving it and more time to consider your next step.
“Most R3 members will give potential clients a free consultation so they can learn more about their situation and explain which options are potentially available to resolve it.”
A company which manufactures eco-friendly packaging for takeaway food items as well as wooden cutlery, paper straws and cups has been bought out of administration, saving the jobs of its 14 staff.
Steven Wiseglass, a director at Manchester-based Inquesta Corporate Recovery & Insolvency, was appointed administrator of Eco Packaging Products Ltd on Thursday, February 15.
Following his appointment, Mr Wiseglass completed the pre-pack sale of the business to EP2 Packaging Ltd.
Eco Packaging Products was founded in February 2020 and operated from a 25,000sq ft facility in Little Hulton, Salford. The premises are accredited with grade A status by the British Retail Consortium. EP2 Packaging is operating from the same premises.
The company supplies wholesalers with a range of corrugated cardboard and solid board takeaway food boxes which are free of plastic, responsibly sourced and biodegradable. They are used for snacks and meals as well as cakes and baked goods, pizzas, burgers and chips.
Its wooden cutlery is produced from ethically sourced birchwood and all items are recyclable, biodegradable and compostable, as are its paper straws and cups.
Mr Wiseglass said: “Eco Packaging Products showed great potential and spent a lot of money on research and development, but unfortunately business did not go quite the way its owners wanted.
“We are pleased that the business has been sold and that the jobs of its employees have been safeguarded, and hope it flourishes under its new ownership.”
Business owners have seen an increase in two thirds of their bills and essential business expenses in the past 12 months even before historic energy bill rises appear according to a new survey.
The research and findings were commissioned by BusinessRescueExpert, one of the top independent insolvency practices in the UK, showed worsening economic conditions across every industrial sector and area of the country.
Four out of five of the 500 directors, CEOs or business owners who responded said that along with their energy bills increasing several other essential charges have risen during the previous year.
Fuel and transportation costs had risen for three quarters of respondents while 68% had also seen increases in the costs of raw materials, deliveries and suppliers costs in 2021/2022.
Over half saw their water rates increasing, while 45% said their staffing costs had gone up including wages and National Insurance Contributions.
The only area that saw an overall decrease was spending on advertising and marketing which is discretionary and done by the business themselves.
Chris Horner, Insolvency Director with BusinessRescueExpert, said the survey is a valuable snapshot of this moment when businesses are expecting to experience a large rise in energy prices and other bills but before support measures from a new Prime Minister are announced and implemented.
He said: “The past two years have seen unprecedented trading conditions for directors and business owners that were forced on them through no fault of their own.
“Now Covid-19 appears to be behind us and it should be a time to recover and recuperate, instead most of us are looking at unprecedented rises in essential energy bills unless there is some drastic intervention from the new administration.
“But even if energy bills happen to be frozen, we can see that lots of other essential costs have also risen for companies making their job of making a profit and a positive contribution to the economy just as difficult as it was during the pandemic years, if not more because there is currently no additional support measures to help them.
“We’ve been looking at the troubles facing pubs and restaurants recently and as our survey shows, businesses are having to deal with exactly the same issues no matter what industry they’re in or no matter where in the country they’re based.
“One silver lining to this particular cloud is that similar solutions will work just as effectively for a sole trader in Southampton as they would for a Marketing agency in Sunderland or a newsagent in Strathclyde.
“The first thing they should do is get some advice from an insolvency professional which is usually free for an initial consultation.
“Depending on the individual circumstances facing each a business, a range of options exist to help them rescue and restructure including administration, CVAs or insolvency moratoriums.
“Alternatively closure might be the more logical and preferable route forward for them and solutions such as creditors voluntary liquidation (CVL) or members voluntary liquidation (MVL) could produce a better result for them both professionally and personally.
“Anybody looking at the research and nodding or recognising similar patterns in their business should use this period before big decisions are being announced to get in touch and find out what they can do to help themselves and their company today rather than keeping their fingers crossed.”
Methodology
A total of 500 business owners, directors, CEOs and CFOs were surveyed for their views and experience on the cost of doing business in 2022.
The survey was weighted to achieve roughly comparable responses based on company size, geographic location and industrial sector to give as broad as possible a snapshot of how companies are managing their expenditure ahead of higher predicted bills and charges coming in Q4 2022 and all of 2023.
Question One – how many employees does your company employ?
Company Size
Total
%
One – Sole Trader
182
36.3
Two to Ten employees
109
21.8
11 to 49 employees
55
11
50-99 employees
70
14
100 or more employees
71
14.2
None of the above
14
2.8
The majority of respondents were sole traders with the next largest category being businesses employing between two and ten employees.
Question Two – What part of the UK is your business located in?
Location
Total
%
Northern Irelands
8
1.6
Scotland
35
7
Wales
30
6
North West England
54
10.8
North East England
31
6.2
Yorkshire & Humber
39
7.8
East Midlands
39
7.8
West Midlands
38
7.6
South West England
35
7
London
72
14.4
South East England
84
16.8
East of England
36
7.2
The survey has a good representation from each nation of the UK and English regions with the majority being located in the South East and London with North West being the next most populous – reflecting the number of businesses based in each location in total.
Question Three – What industrial sector does your business primarily operate in?
Industrial Sector
Total
%
Agriculture
16
3.2
Mining
2
0.4
Manufacturing
33
6.6
Energy, Gas or Air supply
13
2.6
Water supply & sewerage
4
0.8%
Construction
44
8.8%
Retail
75
15%
Transportation & Storage
8
1.6%
Hospitality, accommodation & food
15
3%
Real Estate
20
4%
Communication & Info services
18
3.6%
Professional, Scientific & Technical services
33
6.6%
Administration & Support
21
4.2%
Public administration & defence
5
1%
Education
40
8%
Health & Social Work
24
4.8%
Arts, entertainment & recreation
41
8.2%
Other
89
17.8%
All industrial sectors are represented in the survey but the top three named sectors are Retail (14% of respondents); Construction (8%) and Arts, entertainment & recreation (8%). Other appears to be disproportionately represented but this could be due to confusion regarding sector classification on the part of respondents.
Question Four – over the past 12 months – what has happened to your payments for the following?:
Bill
Decreased
Remained the same
Increased
N/A
Main finding
Corporation Tax
35(6.99%)
155(30.94%)
155(30.94%)
156(31.14%)
Equal numbers increased or remained the same
VAT
25(4.99%)
167(33.33%)
156(31.14%)
153(30.54%)
Majority remained the same
National Insurance
34(6.79%)
177(35.33%)
228(45.51%)
62(12.38%)
Majority increased
Bounce Back Loans
31(6.19%)
125(24.95%)
79(15.77%)
266(53.09%)
Majority remained the same
Other loans
38(7.58%)
90(17.96%)
83(16.57%)
290(57.88%)
Majority remained the same
Business rates
16(3.19%)
136(27.15%)
187(37.33%)
162(32.34%)
Majority increased
Rent
12(2.40%)
118(23.55%)
218(43.51%)
153(30.54%)
Majority increased
Electricity & Gas
10(2.00%)
41(8.18%)
409(81.64%)
41(8.18%)
Majority increased
Water
22(4.39%)
127(25.35%)
290(57.88%)
62(12.38%)
Majority increased
Staff costs inc wages
20(3.99%)
140(27.94%)
226(45.11%)
115(22.95%)
Majority increased
Raw materials/suppliers/deliveries
17(3.39%)
71(14.17%)
340(67.86%)
73(14.57%)
Majority increased
Fuel/transportation
15(2.99%)
43(8.58%)
384(76.65%)
59(11.78%)
Majority increased
Marketing/advertising
28(5.59%)
199(39.72%)
186(37.13%)
88(17.56%)
Majority decreased
Capital purchases
36(7.19%)
159(31.74%)
171(34.13%)
135(26.95%)
Majority increased
Sundries inc petty cash
35(6.99%)
176(35.13%)
206(41.12%)
84(16.77%)
Majority increased
Out of 15 different expense categories, respondents saw their outgoings rise in 10 of them with Electricity & Gas bills already being the most common with 81.6% of respondents saying theirs had gone up even before the October 1st rise.
The next most common rise experienced was with fuel and transportation costs with 76.7% of respondents reporting an increase here while 67.9% saw the price of raw materials, deliveries and suppliers costs rise in the previous 12 months.
Water rates had risen for 57.9% of respondents with 45% reporting increases in National Insurance Contributions and other staff costs including wages.
Corporation Tax, VAT and repayments for bounce back loans and other loans remained the same for the majority of respondents.
The only area that saw a decrease was spending on advertising and marketing by the businesses themselves.
Question Five – In order of concern, which bills are you most worried about being able to meet in the next few months?
Bills
How worried are you out of 10? (average)
Electricity & Gas
3.95
Water bills
5
Wages & staff costs
5.09
Rent
5.23
National Insurance
5.49
Other bills
5.61
Business Rates
5.74
VAT
6.11
Corporation Tax
6.29
Bounce back loans or other loans
6.5
Respondents were asked to rate out of ten how worried they were about being able to pay a particular bill with 1 being the most concerned and 10 being not worried at all.
Electricity and Gas bills were easily the most concerning with an average total of 3.95.
Water bills followed this at 5 with staff wages and other associated costs following closely with an average of 5.09.
Being able to service bounce back loans and other loans was the least worrying with an average score of 6.5. This is mainly due to the fixed and certain nature of the repayment schedule.
Question Six – In the event of severe cash flow issues – where would you go first for insolvency advice?
Information source
Mean ranking
My accountant
2.83
Internet searches or websites
2.96
Friends and family
3.34
An online insolvency firm
3.71
A high street insolvency firm
3.79
Other
4.36
The final question asked respondents to rank in order (1-6) which source they would use to find insolvency advice for their business.
The mean revealed that the majority of respondents would first turn to their accountant for advice on insolvency and other measures to protect their business.
RESPONDENTS WORRIES – IN THEIR OWN WORDS
We gave respondents the opportunity to let us know if they had any other worries or concerns about the cost of doing business in 2022 and have reproduced the most striking:
“Constant rises in everything. How long can we continue to not pay ourselves over staff?”
“It’s a very worrying time. I don’t know if we are going to be here in a few months. There is no support for the cost of living crisis.”
“Going to be hard to compete with bigger companies on price and to keep profit.”
“I am worried that costs will increase so much that my business will no longer be profitable.”
“I have had to put my prices up so I’m worried I’ll lose customers.”
“My job is supplying music lessons which are an expense that most families won’t be able to meet.”
“We’re a charity and are worried about being affected by the same issues as those we support – energy rates and rent for example.”
“A very worrying time as everyone’s bills are going up. Will they want my DJ/Photo booth at their parties and weddings if they’re cutting back?”
“Running costs are going up which is a concern as people are spending a lot less on their entertainment.”
“With interest rates rising and the cost of living going up, I’m concerned my business may go bankrupt.”
“In the last recession we had money in our deposit account to help us throughout. This time we don’t have those funds available because of the pandemic.”
“The cost of energy is frightening.”
“Everything is so unpredictable. I’m concerned about the lack of demand as the cost of living increases for my customers. They may not be able to afford my services as they start to cut back on outgoings and reduce budgets.”
“I’m concerned about the cost of living affecting my business. I’m worried about rents and bills increasing, meaning that it’s not feasible for my business to continue. I can’t increase my wages to balance the bills.”
“I’m not sure my business is going to be here in 2023.”
“Costs are only going to increase. Luckily we laid off staff a while back but it’s difficult to be effective while providing value for money with less work hours being put in.”
“My business is B2C and the cost of living crisis is already resulting in lower than average sales. People are watching their money and my products (clothes/shoes/homewares) are generally not a high priority when budgeting.”
Legal firm Aaron & Partners is celebrating the success of its latest trainee, Natalie Antenbring-Unwin, who has qualified as a solicitor in the firm’s Dispute Resolution & Insolvency team.
Natalie, who joined the practice as a paralegal in 2016 after graduating from the University of Law in Chester, completed her training programme with the firm and will now take up a permanent position in its Shrewsbury office within the Dispute Resolution and Insolvency team.
Natalie said: “I’m incredibly grateful for the opportunities I’ve had whilst training with Aaron & Partners and for the support the firm has given me during my training contract. It feels great to be able to say that I’m now a qualified solicitor.
“Working as part of such a great team of highly experienced and knowledgeable lawyers has already been an invaluable experience and I’ve learnt a huge amount here. I’m looking forward to the new role as a qualified solicitor and being able to continue to learn and develop and ultimately to assist our clients.”
Natalie has also gained the Higher Rights of Audience qualification, meaning she can represent clients in the High Court of England and Wales as a solicitor advocate.
Stephen Taylor, a Dispute Resolution & Insolvency Partner at Aaron & Partners said: “Natalie is an excellent lawyer who has demonstrated all of the qualities that we look for. I have no doubt that she will enhance the Dispute Resolution Team within our Shrewsbury office.
“As a firm, we are passionate about giving people the opportunity to develop and learn and Natalie has worked hard to get to this stage. During what is an incredibly uncertain time for many, it’s fantastic to be able to celebrate some positive news.”
