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Corporate insolvencies are the highest since 2009 – Do you need help?

Corporate insolvencies in England and Wales hit 2,163 in June, up 27% year on year as inflation and rising costs hit businesses.

Worst hit sectors were construction and hospitality, while there were signs of pressure on the property sector with estate agents closing at the highest rate seen for several years.

The latest figures are the worst since the 2009 financial crisis, with little sign of improvements in the immediate future.

This is higher than levels seen while the government support measures were in place post covid-19 and also higher than pre-pandemic numbers which stood at 1,466 in June 2019. Compulsory liquidations in England and Wales were up 77% to 260 due to increased winding-up petitions presented by HMRC, Insolvency Service figures revealed.

Over three months, insolvencies hit 6,403, up 16% marking the first-time quarterly insolvencies have topped 6,000 since the financial crisis.

For individuals, 643 bankruptcies were registered, which was 29% higher than in June 2022, but less than half of pre-2020 levels.

Examples of what the commentators are saying:

‘The combination of higher interest rates and a slowing economy is taking its toll, with quarterly insolvencies nudging over 6,000 for the first time since the financial crisis. The only other time things have looked this bleak was during the early nineties’ recession.

‘The monthly figures confirm what we are seeing on the ground – that UK corporates are struggling to cope with a challenging combination of rising interest rates, sticky inflation, higher wage expectations whilst recovering from a hangover of Covid debt.’

‘HMRC is increasingly active, and many directors are facing the very difficult decision to shut their businesses – with the construction and retail sectors being hit hardest.’

‘Early action and communication with key stakeholders, including banks and investment funds, is the key to survival for businesses. If they are facing difficulties, the sooner they seek appropriate professional advice, the more options they’ll have and the greater their chances of rescuing the business and saving jobs. Even if businesses aren’t teetering on the edge, working capital and cash management should always be a focus.’

‘As well as a 12-month forecast, companies should prepare a rolling 13-week rolling cash flow forecast to ensure that they are aware of their cash burn, and therefore the time available to implement a recovery plan. If performance does dip, business owners should ask whether they know where the improvement opportunities are, or the scope for reducing costs.’

Conclusion

Companies need to take action to protect their businesses by controlling costs and reviewing profit projections. We do already do this as part of our core service.