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Latest News – Insolvency Continues to Rise
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Insolvency statistics for November 2023 were released on the 15th December 2023 by the Insolvency Service. A further increase of 149 cases in November, signifies a 6% increase in insolvency when comparing November to October 2023. Below we break down the figures into a Year and Year and Month by Month comparison.
Registered Company Insolvencies
Breakdown:
In November, 2466 company insolvencies occurred, with the majority of the cases attributed to Creditors Voluntary Liquidations (CVL’s) with 1962 cases. Furthermore, there were 359 Compulsory Liquidations, 133 Administrations and 12 Company Voluntary Arrangements (CVA’s).
Year on Year Comparison:
A 21% increase in insolvency can be observed when comparing November 2023 with the same month the previous year. November 2023 saw an additional 434 insolvency cases in comparison to November 2022 consisting almost entirely of 369 cases of Creditors Voluntary Liquidation and 64 cases of Compulsory Liquidation.
There has been a steady increase in the number of Compulsory Liquidations since April 2023, however the number of Compulsory Liquidations has reached the highest level since possibly prior to 2019. A 22% increase is also notable in the number of Compulsory Liquidations in comparison to November 2022. Creditors Voluntary Liquidations also remain at an elevated level and are the highest they have been since May 2023 with a significant 23% increase in November compared to the same month in 2022.
The industry specific insolvency statistics for the construction industry in November will be released next month, however for the month of October, 375 insolvency cases were registered. In comparison to October 2022, this is an increase of 27 cases.
To break this down further, 210 cases affected companies within the Specialised Construction Activities sector and a further 151 cases were registered for companies falling into the Construction of Buildings sector of which, to be more specific, 86 insolvency cases can be attributed to the Construction of Residential and Non-Residential sector.
A Month on Month View:
Compulsory Liquidations and Creditors Voluntary Liquidations appear to be the contributing factors in the 6% increase in insolvency for November. There was an increase of 99 cases in Compulsory Liquidations and an increase of 75 cases in Creditors Voluntary Liquidations. The only decrease in insolvency method can be found in Administrations which decreased by just 13 cases in comparison to October 2023.
The Development of Building Projects sector in combination with the Construction of Residential and Non-Residential Buildings sector are the driving force behind the 11% insolvency increase for the construction industry when comparing September 2023 and October 2023. The Development of Building Projects sector saw an increase of 16 cases and the Construction of Residential and Non-Residential Buildings sector noted an increase of 17 cases.
Concluding Remarks
It is evident that insolvency rates continue to climb for the majority of industries and the construction industry is no exception. As we delve deeper into the festive month, activity in the construction industry is likely to slow down and this may also have an impact on both cash flow and insolvency rates.
Due diligence and keeping track of your key suppliers and clients could not be more vital to mitigate the risk of a bad debt. Now may also be the right time to review your current credit control practices and methods ahead of the new year when new activity and demand within the industry may start to rise.