There were 6,342 seasonally adjusted corporate insolvencies in Q2 2023 – a 8.9% rise compared to Q1 2023’s total of 5,824.

• Corporate insolvency levels for Q2 2023 were 13.1% higher than Q2 2022’s figure of 5,606, 105.8% higher than Q2 2021’s total of 3,082, and 44.7% higher than Q2 2019’s total of 4,382.

There were 26,390 seasonally adjusted personal insolvencies in Q2 2023 – a 7.9% decrease compared to Q1 2023’s total of 28,644.

• Personal insolvency levels for Q2 2023 were 11.5% lower than Q2 2022’s figures of 29,819, 3.1% lower than Q2 2021’s total of 27,237, and 12.1% lower than Q2 2019’s total of 30,013.

Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body, responds to the Q2 2023 England and Wales personal and corporate insolvency statistics, which were published today by the Insolvency Service: “Corporate insolvencies have hit a 14-year high this quarter – and this is due to a rise in Creditors’ Voluntary Liquidations, administrations and Company Voluntary Arrangements. Although Compulsory Liquidations have fallen compared to the last quarter, numbers for this process are the highest we’ve seen in the second quarter of the year since 2019.

“More and more businesses are running out of road or rope. Directors are choosing to close down their firms while the decision is still theirs, while an increasing number of creditors – including HMRC – are turning to winding-up petitions to recover the debts they’re owed.

“When the pandemic ended, many directors thought and hoped things would improve, but instead they’ve faced rising costs, supply chain issues and a customer base that is tightening its purse strings to cope with the cost of living.

“Business owners remain worried about customer demand, rising costs and the state of the economy, while high interest rates may affect access to rescue funding and could deprive saveable firms of a lifeline. Unless the economic picture improves, it’s likely more businesses will need an insolvency process to help resolve their financial issues, and numbers will remain high throughout the rest of this year.

“Turning to personal insolvencies, the trend we’ve seen is down to a fall in Individual Voluntary Arrangement (IVA) numbers – which suggests that the ongoing cost of living crisis isn’t translating into more people requiring a personal insolvency process at present.

“However, the rise in bankruptcies and Debt Relief Orders suggests that more people are unable to make almost any kind of contribution to repaying their debts this quarter, so have turned to these processes in an attempt to resolve their financial issues.

“Making ends meet is still a key concern for many. People are living in a world where it costs more to keep a roof over their head, put food on the table and keep the lights on, so they’re only spending money on the essentials. Alongside their money worries, job security and the health of the economy are key concerns for many people – while rising interest rates could affect their ability to pay or secure mortgages in the future, and inflation levels will continue to push costs up.

“An increasing number of people are turning to credit cards to pay bills or pay for the basics, which is concerning as people in this position are just one financial shock – like an unexpected bill or a cut in hours at work – away from becoming insolvent.

“Anyone who is worried about their business or personal finances should seek advice as soon as possible. Money worries are one of the hardest topics to talk about, but having that conversation while your concerns are fresh gives you more time to make a decision, more potential solutions for your issue, and usually leads to a better outcome than if you’d waited till the problem became more serious.

“Most R3 members will give potential clients a free consultation to understand more about them and their financial issues and outline the potential options open to them to resolve them.”

The number of individuals entering a personal insolvency procedure has dropped to its lowest quarterly level since Q3 2020. This is heavily fuelled by a reduction in IVA registrations in the quarter.

The seasonally adjusted figures, released today by the Insolvency Service, reveal that there were 26,390 individuals entering either bankruptcy (1,826) a debt relief order or DRO (7,106) or an individual voluntary arrangement or IVA (17,458) in Q2 2023.

IVA numbers were down 12% on the previous quarter and dropped 22% when compared to the same quarter in 2022. For the second quarter running, DRO numbers broke the 7,000 barrier, increasing 1% in the period and by 23% when compared to the same quarter in 2022.

Interestingly however, bankruptcy numbers rose for the second successive quarter and recorded the highest number since Q4 2021.

Andy Nalliah, personal insolvency partner at RSM UK said: ‘IVA registrations have dropped significantly when compared against both the previous quarter and the same quarter last year. This could suggest the pandemic trend of higher-than-normal IVA registrations is now slowing. Furthermore, despite a recent slowdown in inflation, energy prices and the cost of groceries, the drop in IVAs could reflect the debtor’s lack of confidence in their own ability to service the financial commitments associated with an IVA.

‘Many people will be starting to feel the bite of hiked interest rates as their fixed term mortgages come to an end and this could be a key driver behind the 22% drop in IVAs compared to the same quarter last year.

‘On the flip side, albeit on a lesser scale, bankruptcy numbers have risen by 4% in the quarter and by 11% when compared to the same quarter last year. This is a further sign of creditors acting upon their previously re-evaluated credit and debt recovery strategies.

‘This aligns with the Insolvency Service’s bankruptcy figures for the quarter, which found 19% have arisen because of creditor petitions; up from 18% in the previous quarter and 16% in the same quarter in 2022. Furthermore, the Insolvency Service report that the actual number of creditor petitions in the quarter is up 10% on the previous quarter and 30% on the same quarter last year.

‘Unsurprisingly DRO numbers remain high, and the quarterly number of 7,106 registrations represents a 1% increase on the previous quarter and a huge 23% increase on the same quarter last year. When compared against pre-pandemic numbers, and perhaps more pertinently against DRO numbers prior to the eligibility thresholds being increased in the summer of 2021, it is likely that the increase in DRO registrations is those at the higher end of the criteria. By extension therefore, it is likely many of these DRO registrations are for debtors who would otherwise have become bankrupt; perhaps explaining in part the lower levels of bankruptcy numbers.’

Digital communications provider Zivver has today released its Public Sector Freedom to Focus report, which explores the importance of data protection and technological interoperability in local and central government.

The report found that 98% of local and central government employees rely on email to get the job done because it is universal and requires little training and implementation. However, IT leaders are all too familiar with the security flaws, with 45% of those surveyed concerned about data loss through email errors. This is supported by findings from the ICO, which showed that, of the incidents reported by government bodies, the majority were due to human error. Despite all this, 91% of those questioned consider email to be the most secure method of communication.

Adam Low, CTO at Zivver: “It is paramount that public facing bodies uphold the highest standards of data protection and privacy. As we have seen with recent incidents, a breach can have severe consequences for individuals and communities, eroding trust and potentially leading to identity theft and other forms of fraud being launched against them. This harms not only those directly impacted but also undermines public trust in the ability of governments to protect their personal data.”

Other highlights from the report include:

• 53% of IT leaders believe that smart technologies are key to progressive risk management
• 58% think that bureaucracy and ‘process overload’ are barriers to focusing on core tasks
• 42% of IT leaders feel there are too many different IT systems across organisations
• 87% of IT leaders would experience a morale boost and better productivity if their organisation invested in technology to reduce email data security concerns

While security is a primary concern, it is also important that public sector organisations can digitally transform and communicate more effectively across different services. However, there are barriers to interoperability with unnecessary bureaucracy and inflated IT systems. Added to this, government entities continue to face recruitment challenges, especially in digital skills. A report published by the NAO details that only 4% of civil servants are digital professionals, which presents issues for IT leaders looking to empower employees to work efficiently and securely.

Low added: “In the absence of skilled professionals, public sector bodies can empower their existing workforce with the tools to work effectively. Unfortunately email in its main form lacks data loss prevention functionally, large file transfer capabilities, recall functionality, expiration controls and multi-factor authentication. While it performs a function to bridge the gap for siloed teams, it must be enhanced to ensure communications are protected before, during, and after sending.”

“The number of corporate insolvencies in Scotland eased on last quarter, but is still around 20% up compared to the same period during 2022. That is unsurprising given the vast changes in the economic landscape over the past 12 months and the huge increase in compulsory liquidations suggests there could be more to come. I have seen a significant upturn in creditor-led petitions in the last few weeks, as they lose patience with debtors and look to call in the money they are due.

“There have been some high-profile cases of firms going into financial distress in recent months, so it is likely the number of insolvencies will remain elevated compared to levels we saw during and prior to the pandemic. This is particularly true of many businesses finding themselves approaching the point where they have to refinance on very different terms, given where base interests are.

“Directors should be as proactive as they can with their businesses, bringing in any debts owed to them where possible before there is any further deterioration in the economic backdrop. Professional advisers can also support them through immediate credit pressures and help steer their businesses towards long-term survival.”

David Alexander, head of debt recovery at Gilson Gray

Intrum, Europe’s largest credit management service provider, partnered with Aryza Group, a leading provider of financial software solutions, to leverage its cutting-edge software solution, Aryza Control to automate its business processes, improve performance, and establish a strong market presence in the Netherlands.

As part of its strategic mission, Intrum aims to become the market leader in Belgium and the Netherlands. Intrum has recognised its clients’ evolving needs and expectations in recent years and is committed to sustainable growth aligned with their requirements.

Aryza Control has been instrumental in enabling Intrum’s growth trajectory by automating various aspects of the business and enhancing overall performance. Intrum cooperates with numerous bailiffs for judicial collection when amicable collection attempts prove unsuccessful. To objectively evaluate the performance of bailiffs handling ongoing files, Intrum leverages Aryza Control with half a million claims meticulously recorded in the software, making the information derived from it key.

The importance of the information obtained from Aryza Control cannot be overstated. Intrum is increasingly engaging in agreements with bailiffs to determine the feasibility of amicable collection for certain files, aiming to save consumers from unnecessary costs. Aryza Control serves as a transparent solution in these situations, enabling objective evaluations based on mutually agreed-upon data. By leveraging Aryza Control, Intrum gains greater control across the entire chain of activities, ranging from debtor management and amicable collection to judicial collection.

Aryza Control provides Intrum with invaluable insights by unlocking critical operational and financial data reported by bailiffs. This information is crucial for Intrum to assess the financial impact during the judicial collection stage, in line with its commitment to sustainability. Additionally, Intrum actively engages in discussions with its clients about the importance of socially responsible debt collection and strives to minimise the reliance on judicial processes.

The implementation of Aryza Control empowers Intrum to distinguish between individuals who are genuinely unable to pay and those who are unwilling to fulfil their obligations, enabling them to make informed decisions regarding the most suitable collection options for different cases. The transparency provided by Aryza Control significantly enhances Intrum’s ability to address inquiries and concerns related to judicial recovery, thereby improving overall transparency and performance.

Erik Koch, Aryza Benelux General Manager commented “By adopting Aryza Control, Intrum is taking proactive steps to streamline its operations. The collaboration between Intrum Netherlands and Aryza Group showcases their mutual dedication to leveraging cutting-edge technology to meet the evolving needs of its clients and fostering sustainable growth to drive positive change in the credit management industry.”

Guy Colpaert, Managing Director at Intrum Benelux, said “This strategic collaboration enables us to automate our business operations, enhance performance, and establish a prominent market presence in the Netherlands. Aryza Control provides us with unprecedented transparency and control across the entire collection process, allowing us to make informed decisions, improve efficiency, and deliver exceptional results.”