Insolvency figures for January have confirmed there was no post-Christmas boost for businesses in the South and Thames Valley.
R3, the trade body for restructuring and insolvency professionals, noted that although the new statistics for England and Wales showed a dip when compared with December, insolvencies are up from January last year and against pre-pandemic levels.
R3’s analysis of data from The Insolvency Service also showed a rise in personal insolvencies, indicating that January was another tough month for consumers.
The latest statistics for England and Wales showed corporate insolvencies decreased by 11.8% in January 2024 to a total of 1,769, compared with December 2023’s total of 2,005, and increased by 5% compared with January 2023’s figure of 1,685.
Personal insolvencies also increased by 22.8% in January 2024 to a total of 8,089 compared with December 2023’s total of 6,585, and increased by 4.3% compared with January 2023’s figure of 7,756.
Neil Stewart, chairman of R3’s Southern and Thames Valley region, said: “Recently, I expressed cautious optimism, in light of inflation falling faster than expected and the decrease in the number of corporate insolvencies from December’s figures, but it is inescapable that pressure on businesses and individuals remains high.
“January 2024 saw the highest corporate insolvency figures for the month of January in four years, with both compulsory liquidation and Creditors’ Voluntary Liquidation (CVL) levels higher than in January 2019.
“Creditor pressure, including post-pandemic efforts by HMRC to collect accumulated tax debts, has not abated and borrowing remains problematic, at a time when the cash reserves of many businesses have been exhausted.
“Levels of corporate insolvency were lower than in December due to a fall in the number of CVLs, but compulsory liquidations returned to their second highest level in four years.
“Creditors are vigorously pursuing the debts they are owed as we go into the final quarter of the financial year, and they look to balance their own books and pay their own debts.
“Struggling businesses missed out on the lifeline they were hoping for from the Christmas trading period.
“GDP has fallen for two successive quarters, which means that the country is in recession, and its description as ‘mild’ or ‘shallow’ is cold comfort to those who have passed or are close to passing the tipping point into an insolvency process.”
Neil, a regional associate director at insolvency litigation financing company Manolete Partners, added: “Personal insolvency numbers rose month-on-month and year-on-year, with numbers increasing for every personal insolvency process compared to December 2023.
“There was also a rise in Debt Relief Orders (DRO) and bankruptcies and a fall in Individual Voluntary Arrangement numbers when compared to January 2023.
“This suggests that there is at least a short-term increase in demand for all kinds of personal insolvency support, with increased DRO and bankruptcy levels compared to January 2023’s figures.
“Breathing Space numbers also soared to the highest levels since the process was introduced in May 2021. That has provided many with a break from creditor pressure following the festive period, but what this means for personal insolvency levels in the medium to long-term remains to be seen.
“We know January is traditionally a tough month for consumers – and this was no exception. Christmas came at the end of a year of increased expenses, and the outgoings associated with it may have been too much for those who had been scraping by until then.
“Food, fuel, housing and energy costs remain high – as they have for a long time now – and are stretching many households’ finances.”
He concluded: “Our message to anyone in the South and Thames Valley who is worried about their personal or business finances is to seek advice from a qualified and regulated professional.
“Don’t wait for things to get better because the chances are that they won’t, without taking a different approach.
“Most R3 members will give a free consultation to prospective clients so they can understand more about their circumstances and outline which options are best suited to them.”
