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England and Wales insolvencies rise 17% on year in September

Published by Uma Rajagopal

Posted on October 13, 2023

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LONDON (Reuters) -The number of companies declared insolvent in England and Wales last month was 17% higher than a year before, but insolvencies over the third quarter look on track to be down slightly from the second quarter’s 14-year high.

The Insolvency Service, a government agency, said 1,967 companies were registered insolvent, according to the non-seasonally adjusted data, up from 1,688 a year earlier.

Over the three months to the end of September, 6,011 companies were declared insolvent on a non-seasonally adjusted basis, down from a seasonally adjusted total of 6,342 in the second quarter, which was the highest since 2009.

Seasonally adjusted third-quarter data will be published on Oct. 31.

Many businesses and households have come under increased pressure from rising interest rates and a sharp increase in the cost of energy and other necessities such as food.

The Bank of England said on Tuesday it expected businesses to be “broadly resilient” to higher interest rates and weak growth, but there was likely to be an increase in the share of households and firms facing high debt costs.

“High levels of insolvencies have become entrenched across the economy after a turbulent 12 months. Unless there’s a rapid and significant improvement in economic conditions, this trend will continue right through the winter and into next year,” said David Hudson, a partner at restructuring advisors FRP.

The Insolvency Service said the increase was driven by creditors’ voluntary liquidations, where a business’s directors and creditors agree to wind it up.

Court-ordered insolvencies, which account for a small share of the total, were now similar to 2019 levels, after falling during the COVID-19 pandemic when there were legal barriers to forcibly winding up companies, it added.

Individual insolvencies in September in England and Wales were 27% down on a year before and also below 2019 levels.

(Reporting by David Milliken; Editing by William Schomberg and Sachin Ravikumar)