Q3 insolvency statistics – Optimism reducing amongst business owners, says Azets, UK’s largest accountancy firm for SMEs


Blair Milne and Louise Brittain, Restructuring and Insolvency Partners at Azets, the UK’s largest regional accountancy and business advisors to SMEs with offices across the South East, including in Northamptonshire, have commented on the 2021 Q3 company and individual insolvency statistics for England and Wales released by the government on 29th October.
The statistics, released on Friday, are here:-
Company insolvency statistics for July to September 2021:
individual insolvency statistics for the same period:
Company insolvencies
Blair Milne, Restructuring and Insolvency Partner at Azets said:
“The number of corporate insolvencies in Q3 increased by 17% on the previous quarter, but still remains lower than pre-Covid levels with a drop of around 14% when compared with the corresponding quarter of 2019. The quarterly upturn in corporate insolvency appointments is not surprising, given the recent withdrawal of government support measures such as the furlough scheme and the moratorium on winding-up petitions. The biggest increase can be seen in Creditors’ Voluntary Liquidations, where directors have sought to place their business into an insolvency process. It is likely that in many cases the return to a risk of creditor enforcement action has led directors to act now, where previously protections were in place. The number of compulsory liquidations and administration appointments remain static and still significantly below pre-Covid levels.
“I expect to see the upward trend continue into the final quarter of this year and beyond, reflecting the many significant challenges facing SMEs. Many businesses have yet to see a return to pre-pandemic levels of activity and are now having to navigate a myriad of challenges including rising inflationary costs, particularly utility charges, supply chain disruption, increasing labour and material costs and chronic staff shortages. These challenges come at a time when covid support loan repayments are now becoming due, and many businesses will have to address arrears of HMRC debt. Optimism is reducing amongst business owners, who face very challenging trading conditions in the months ahead.
“Businesses in retail or hospitality and leisure, sectors which have been severely impacted by the pandemic, will have welcomed Chancellor Rishi Sunak’s announcement in this week’s Autumn Budget of a temporary 50% cut in their business rates, up to a maximum of £110,000. Whilst a positive step, these sectors remain incredibly fragile as they try to absorb rising wages and overhead costs. Regardless of sector, taking early professional advice will be critical to the survival of many SMEs in the months ahead.”
Individual insolvencies
Louise Brittain, Restructuring and Insolvency Partner at Azets, said:
“The biggest change is the increase in Debt Relief Orders which is up by 31% on the second quarter of 2021 and show an increase of 28% on the same quarter of last year. This is not surprising seeing as the qualifying amount of liabilities has increased now to £30,000 with a total asset level of £2,000 or below and less than £75 per month of surplus income. What is concerning, however, is that although there is a slight decrease in IVAs on last quarter, down to 20,559 from 21,546, there is an increase in IVAs of 48% on the same quarter last year. This shows more and more people are moving into voluntary insolvency procedures to deal with the increasing burden of household debt.
“Bankruptcy numbers this quarter are at an all-time low – in , the lowest since before 2011. The number of debtors seeking court relief has dropped alongside the number of creditors forcing individuals into bankruptcy. This is not surprising bearing in mind the new breathing space period and the continued moratorium on debt enforcement and these numbers are expected to increase once the breathing space periods start to expire and the return to enforcement from March 2022.
“It is clear from these figures that UK households are in a fragile state. With increasing costs of basic living costs, I.e., food, fuel, and travel, increasing significantly and the proposed increases in National insurance, as well as the talk of interest rate increases, UK households are getting extremely worried about what next year will bring. Non-essential spending will be very carefully considered, and it would not be surprising to see this curtailed and high street spending at Christmas affected. Industries like the motor trade and retail can expect to see the slow return to pre-pandemic levels continuing.”