Research and Statistics Archives

Monthly Insolvency Statistics: December 2023

16th January, 2024 in Research and Statistics

The monthly insolvency statistics have been released for the month of December 2023.Overall it looks like the number of insolvencies are pretty flat compared to last month. Of course the actual number of insolvencies isn't the whole story as some companies are much bigger than others.In the last few months there haven't been any larger companies in financial trouble with only Wilko going bust back in August. At the beginning of this year we are hearing about other larger businesses in trouble. Superdry have just turned to emergency funding to keep themselves afloat and at our end we are seeing some larger companies asking for help. This may be due to the inflationary environment which has added to the cost of labour and materials. In addition these larger companies have taken out loans at rock bottom rates and now beginning to see higher rates. Larger companies tend to resist this pressure for longer but eventually they need to ask for help and cut costs or raise prices (if possible) Company Insolvencies December 2023 saw 2,002 registered company insolvencies through England and Wales. This is an increase of 2% when compared to the amount registered in the same month of 2022. This is also higher than figures during the pandemic and pre-pandemic. Compared to November 2023 figures it is a slight drop.The company insolvencies consisted of:1,731 Creditors Voluntary Liquidations (CVLs) 153 Compulsory Liquidations 103 Administrations 15 Company Voluntary Arrangements (CVAs)There were no receiverships registered.CVLs (5% higher than in Dec-22) and CVAs (50% higher than in Dec-22) appear to be the drivers of the increase in company insolvencies, compared to December 2022. Compulsory Liquidations and Administration levels fell, by 18% and 8% respectively.Between 26 June 2020 and 31 December 2023, 49 moratoriums were obtained in England & Wales, along with 22 companies having a restructuring plan registered at Companies House.Moving on to the statistics for Scotland and December 2023 saw 108 registered company insolvencies (almost exact to the recorded figure for November 2023). This is made up of 65 CVLs, 40 compulsory liquidations and 3 administrations. No CVAs or receiverships were recorded.Historically, compulsory liquidations have led the way for the company insolvencies in Scotland. But through 2023 CVL numbers remained more than 1.5 times higher than compulsory liquidation numbers.Between 26 June 2020 and 31 December 2023, no moratoriums were obtained for companies in Scotland. Two companies did register a restructuring plan at Companies House.For Northern Ireland, 25 company insolvencies were registered in December 2023 – this being 67% higher than that in December 2022 and almost identical to the figure for November 2023. Registrations consisted of 6 compulsory liquidations, 17 CVLs, 1 administration and 1 CVA. No receiverships were recorded for this period. Individual Insolvencies England and Wales had 6,584 Individual Insolvencies registered in December 2023. This is 20% less than what was registered in December 2022. It is thought that the reason for the decline is the lack of IVAs, as DROs and bankruptcies increased.Delving deeper, the registrations are broken up into:2,472 Debt Relief Orders (DROs) – 25% higher than in December 2022. 3,616 Individual Voluntary Arrangements (IVAs) – 38% lower than in December 2022. 496 Bankruptcies (split as 386 debtor applications and 110 creditor petitions) – 22% higher than in December 2022.Northern Ireland had 76 Individual Insolvencies registered in December 2023. Numbers are made up of 60 IVAs, 6 DROs and 10 bankruptcies. Total numbers are 39% lower than the same month a year previous.You can refer to the full report here.

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Monthly Insolvency Statistics: December 2023

Monthly Insolvency Statistics: November 2023

22nd December, 2023 in Research and Statistics

The monthly insolvency statistics have been released for the month of November 2023. In this article the findings will be explored. Company Insolvencies November 2023 saw 2,466 registered company insolvencies through England and Wales. This is an increase of 21% when compared to the amount registered in the same month of 2022. This is also higher than figures during the pandemic and pre-pandemic.The company insolvencies consisted of:1,962 Creditors Voluntary Liquidations (CVLs) 359 Compulsory Liquidations 133 Administrations 12 Company Voluntary Arrangements (CVAs)There were no receiverships registered.CVLs (23% higher in Nov-23 than Nov-22) and Compulsory Liquidations (22% higher in Nov-23 than Nov-22) appear to be the drivers of the increase in company insolvencies, compared to November 2022. Although CVAs also did see a 20% increase. Administration levels were similar to what it was in November 2022.Between 26 June 2020 and 30 November 2023, 47 moratoriums were obtained in England & Wales, along with 22 companies having a restructuring plan registered at Companies House.Moving on to the statistics for Scotland and November 2023 saw 109 registered company insolvencies. This is made up of 74 CVLs, 30 compulsory liquidations and 5 administrations. No CVAs or receiverships were recorded.Historically, compulsory liquidations have led the way for the company insolvencies in Scotland. But in the first 11 months of 2023 CVL numbers remained more than 1.5 times higher than compulsory liquidation numbers.Between 26 June 2020 and 30 November 2023, no moratoriums were obtained for companies in Scotland. Two companies did register a restructuring plan at Companies House.For Northern Ireland, 26 company insolvencies were registered in November 2023 – this being 30% higher than that in November 2022. Registrations consisted of 13 compulsory liquidations, 6 CVLs, administrations and 2 CVAs. No receiverships were recorded for this period. Individual Insolvencies England and Wales had 8,243 Individual Insolvencies registered in November 2023. This is 21% less than what was registered in November 2022. It is thought that the reason for the decline is the lack of IVAs, as DROs and bankruptcies increased.Delving deeper, the registrations are broken up into:4,292 Individual Voluntary Arrangements (IVAs) – 44% lower than in November 2022 3,290 Debt Relief Orders (DROs) – 45% higher than in November 2022 661 Bankruptcies (split as 522 debtor applications and 139 creditor petitions) – 18% higher than in November 2022.Northern Ireland had 111 Individual Insolvencies registered in November 2023. Numbers are made up of 70 IVAs, 21 DROs and 20 bankruptcies. Total numbers are 24% lower than the same month a year previous. Read the full report here.

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Monthly Insolvency Statistics: November 2023

What is a Zombie Company?

26th March, 2021 in Research and Statistics

A zombie company is simply a company that is neither dead or alive. In other words, it is in so much debt that any cash generated is being used to pay off the interest on the debt or not actually reduce it. The company must cut back as much as they can. This means that there is no spare cash or capacity for the company to invest or grow. This means that is unable to employ more staff but on the flip side as long as the company is not actually losing money on an operational basis it does not need to make further redundancies either.Many economists are arguing that the presence of some estimated 150,000 of these companies are taking market share and locking up talent that should be available to more dynamic and less indebted firms.There are some obvious reasons:Interest ratesInterest rates have been very low for some time now so if you are in debt then interest rate payments are pretty low as well. What is more, interest rates have remained stable. This has given the impression that there is no crunch round the corner and has allowed companies to extend and pretend.Bounce Back Loans and CBILSCompanies will be paying back these loans over the next 6-10 years at low interest rates BUT will the repayments allow them any headroom to invest?Banks not wanting to call in loansSince the financial crisis some 12 years ago new liquidity rules and the presence of the Special Liquidity Scheme, and other lending initiatives, means that banks are reluctant to call in loans .If the banks really want to lend to companies then they can go cap in hand to the Bank of England. What is more asset values are depressed and there are not many buyers out there so some banks will wait before calling in administrators in the hope that any recovery will be better in the future.HMRC and the GovernmentHMRC have been concentrating on trying to keep companies afloat during the pandemic. It is right that economic damage is tackled but HMRC has not been very tough on companies that are trading but are building up tax liabilities that they are unlikely to be able to recover. The government are also preferring the devil they know scenario. They do not want to "rock the boat" as it were so there is a bit of a culture of indecision. They worry, perhaps correctly, that any radical action is going to cause short term pain and exacabate the situation.Are you a zombie company and what should you do about it? Simply, you need to ensure that your debts are paid off quickly, repayments are reduced, or a proportion of them are written off. This will allow you to grow. If you are beginning to run up unsecured debts, ie trade creditors and HMRC then you need to act and perhaps a CVA or a Plan A could be an option. What are the risks? Any sudden change in the business or economic environment could be the catalyst for change. An increase in interest rates is being touted as the likeliest "zombie killer" but a change in the banks or Government's attitude to these companies could be equally dangerous. A strong improvement in the economy could also be their deathnell as quicker and more nimble companies will take advantage of the new opportunities presented leaving the zombies behind.The main thing about interest rates is that it will affect thousands of people on mortgages as well which will depress demand for companies goods and services so "zombies" will be hit by a double whammy!

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What is a Zombie Company?

Company Insolvencies in Q4 2020 were lower compared to that of Q4 2019 for England, Wales, Scotland and Northern Ireland

29th January, 2021 in Research and Statistics

The statistics for Company Insolvencies in UK, Northern Ireland and Scotland for Q4 have been released and will be further explored here.Note that caution must be applied when interpreting such statistics. The emergence of the coronavirus pandemic has had at least some effect on the timeliness of insolvency registration, especially since the March lockdown, when insolvency practitioners, intermediaries, Companies House and courts were unable to process insolvencies as per the usual manner. So what key points were taken? England and Wales Q4 In Q4 2020, there were 3,071 registered underlying company insolvencies – this being an increase of 17% from the previous quarter. The increase was primarily driven by an increase in creditors voluntary liquidations (CVLs) and company voluntary arrangements (CVAs). Comparing all other company insolvency procedures, they saw a decrease when compared to the statistics from Q3 2020.Though the absolute numbers of company insolvencies rose between Q3 and Q4 2020, the company liquidation rate per 10,000 active companies fell in the 12 months ending Q4, compared to 12 months ending Q3 2020. It went from 32.3 to 29.2. Ultimately this is due to the numbers of all company insolvency procedures being lower in Q4 2020 than Q3 – apart from CVAs. This liquidation rate, for the 12 months ending Q4 2020, fell compared to 12 months ending Q4 2019 – when the rate was 42.1.It is also key to note that compared to Q4 2019, company insolvencies were lower in Q4 2020. 2020 The total number of company insolvencies in the whole of 2020 reached its lowest annual level since 1989.There were just 12,557 underlying company insolvencies – a decrease of 27% compared to 2019 numbers. It is thought these numbers are driven by a low number of underlying CVLs (hitting its lowest annual level since 2007). Compulsory liquidations and CVAs also reached its lowest annual levels since 1973 and 1993 respectively.It is likely that at least part of the reduction in company insolvencies in 2020 was driven by Government measures put in place to respond to the unprecedented coronavirus pandemic. Insolvency tool analysis In terms of company insolvency tools, all other than administrative receivership appointments, which are low anyway, saw a decrease compared to that in 2019:Compulsory liquidations decreased 55% CVAs decreased by 26% CVLs decreased by 22% Administrations decreased by 16% There was just 3 receiverships - up from the 1 in 2019.There was a 5% difference seen in the total amount of CVLs making up all underlying company insolvencies; in 2020 it was 75% compared to 70% in 2019. With this, a decrease was seen in the amount of company insolvencies from use of compulsory liquidations (17% to 11%). Administrations accounted for 12% of all underlying company insolvencies, up by a percent compared to 2019. The proportion of insolvencies made up of CVAs stayed unchanged, at 2%. Industry analysis In the 12 months ending Q4 2020, the three industries experiencing the highest number of insolvencies are as follows:Construction (with 2,042 insolvencies) Accommodation and food services (1,701 insolvencies) Wholesale and retail trade; repair of vehicles industrial grouping (1,673 insolvencies)Decreases were seen across most other industries, compared to 2019 figures. Company Insolvency in Scotland Q4 2020 saw 146 total insolvencies in Scotland, 44% lower than in the same quarter of 2019. It involved 45 compulsory liquidations, 77 CVLs and 23 administrations. There was 1 receivership and no CVAs.Historically, company insolvencies in Scotland are driven by compulsory liquidations which compares to that in England and Wales where CVLs tend to drive compulsory insolvency trends. This being said, in the last three quarters, fewer liquidations have been seen in Scotland than CVLs. Company Insolvency in Northern Ireland Q4 2020 saw just 24 company insolvencies in Northern Ireland. This is a fall of 79% compared to Q4 2019. Statistics comprised of 15 CVLs, 6 CVAs, 2 compulsory liquidations and 1 administration.Read the full publication of statistics here.

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Company Insolvencies in Q4 2020 were lower compared to that of Q4 2019 for England, Wales, Scotland and Northern Ireland

Retailers increasingly turn to CVAs to restructure their businesses

18th June, 2019 in News Research and Statistics Retail What is a CVA (Company Voluntary Arrangement)?

UK High Street flagging as retailers increasingly turn to CVAs Figures from the British Retail Consortium (BRC) show that the UK high street and retail performance is facing difficulty. In 2016/2017 we saw a sharp decline in performance and it has been stressed that this has continued.This has been borne out in the high number of companies entering administration or seeking company voluntary arrangements (CVAs) within the last 12 months.Here, we'll take a closer look at UK high street performance and the factors causing it to suffer. Firstly, What has happened to high street performance in the UK? These are the key statistics from the latest BRC research:Overall year-on-year (YOY) retail sales fell 2.7% in May 2019 (the biggest decline on record!) Food sales dropped for the first time since June 2016, with further declines in clothing, outdoor goods and footwear 1,566 stores have had to reduce rent amounts Retail & Leisure Parks account for a third of all closures in the UK as a result of a CVA, administration or liquidation Nottingham city centre has experienced the most closures through either a CVA, administration or liquidation Birmingham holds the most closures of all UK Urban Areas. They've had 26 rent reductions and 23 closures since January 2018 Of all the Counties, Greater London saw the greatest damage, by far Footfall was down 1.4% on average over the 12 months to March 2018 As in 2016/2017 figures, the South East saw the most rapid fall in footfall There has been 140 closures and only 6 rescues of retail/leisure operators, since January 2018 To date, May 2019, 24 companies have failed, 743 stores have been affected and 31,250 employees have been impacted.How has this affected specific businesses? Several UK high street retailers have hit the headlines after being forced to take action due to falling footfall, including:Select: Closure of 14 stores, despite 50 being earmarked. Additionally, they have requested for a rent reduction L K Bennett: A notice of intention for Administration was filed, leaving 41 UK stores at risk as well as 480 UK staff affected Poundworld: Saw the closure of almost 200 stores, as they faced liquidation Mothercare: 60 store closures with 77 stores having their rent reduced by 17% Toys R Us: Entered administration after failing to find a buyer, having implemented a CVA New Look: Closed 60 stores and cut 980 jobs after agreeing to a CVA Homebase: A CVA vote, left 45 stores to cease trading with 1500 jobs at riskDespite this, six retailers have been saved. See the cases of House of Fraser, Arcadia, Office Outlet, Patisserie Valerie, HMV and Evans Cycles. What's caused this decline in high street performance? Economic and political uncertainty, falling consumer confidence, changing consumer habits and rising inflation have all contributed to the long-term decline of the UK high street.However, the most pressing factors impacting the retail sector in May 2019 were:1. Low Growth OnlineKPMG's UK retail partner, Paul Martin, stressed: “The extremely low growth online is real cause for concern, especially with almost a third of all non-food sales today being made online. This trend has continued to manifest itself over the last year and requires real focus from the retail community.”2. Business ratesIncreased business rates are potentially the biggest single contributing factor when it comes to UK high street performance.Gary Grant, founder of high street toy retailer, The Entertainer commented: "Landlords are being very realistic about their rent, but the one thing that is not negotiable are business rates."[The retail sector] is seeing many stores empty for long periods of time and the biggest issue is that [retailers] can’t open stores.''“Business rates are out of line now with retail turnover. Business rates are the real killer. Any increase in cost where you have flat and declining turnover is going to put pressure on the bottom line.''“The Government just haven’t got it. They need to take some responsibility for the high street’s decline.”Likewise, Helen Dickinson, OBE, BRC's Chief Executive, states how such rates prevent retailers from ''investing in their physical space. We have a broken tax system, which sees retailers paying vast sums of money regardless of whether they make a penny at the till, and yet the Government is failing to act.''With the UK high street continuing to suffer, it pays to know your options as a company boss. Taking difficult yet decisive decisions at the right times will put you in the best possible position to keep your company trading successfully.If you are worried about declining UK high street performance and the prospect of a CVA, contact the experts at Company Rescue today. Take a look at our site for many useful pages of advice.

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Retailers increasingly turn to CVAs to restructure their businesses