PRESS RELEASE : PwC comments on January’s insolvency data [February 2023]

The press release issued by PWC on 14 February 2023.

According to the Insolvency Service’s latest quarterly data, in January 2023 there were 1,671 company insolvencies – 7% higher than in the same month in the previous year (1,567 in January 2022), and 11% higher than the number registered three years previously (pre-pandemic; 1,502 in January 2020).

Ed Macnamara, Head of Restructuring in PwC’s Restructuring and Forensics practice, said:

“While the number of company insolvencies in January is down on the month before, any respite is likely to be short-lived. The data, which shows a 7% rise on the year before, serves as a reminder that we are still in the midst of a difficult trading environment with rising interest rates and high inflation which, when combined, generally results in more company failures.

“We’re also seeing an uptick in both late payments and the number of requests to extend credit terms. In the construction sector for example, clients have flagged a significant increase in new customer accounts being opened as companies try to spread their credit risk across the market. In addition, many subcontractors are reporting that they’re unable to pay for products because they haven’t been paid either. This domino effect is likely to increase the squeeze on businesses already struggling with their debts and might mean that some are forced into insolvency.”

Rachael Wilkinson, Director in PwC’s Restructuring and Forensics practice, added:

“While many directors are voluntarily folding their businesses – exhausted from a pandemic and continuing supply chain issues – we expect to see more forced closures of businesses as 2023 continues. In the first month of the year, there were 334 winding up petitions filed which, while slightly fewer than the month before, represents a 135% increase on the 142 filed in January 2022.

“With the headwinds impacting businesses intensifying and more pain on the horizon, it’s clear that creditors feel compelled to take action. The best thing businesses can do is get their forecasts in order and look at restructuring options where appropriate in order to help weather the economic storm.”