• Swindon & Wiltshire Economy
• Friday February 2 2024
• Author Name: Peter Davison

Company and personal insolvencies increase in South West – Evelyn Partners

Company and personal insolvencies are on the rise in the South West as the cost-of-living crisis tightens its grip, according to Bristol-based professional services group Evelyn Partners.

The company crunched the figures released by the Insolvency Service and found that personal bankruptcies across Bristol, Bath, North Somerset and South Gloucestershire were up 73 per cent on the same period last year – although down 16 per cent since last quarter.

Meanwhile, the latest figures for corporate insolvencies published by The Insolvency Service show there were 6,788 seasonally adjusted registered company insolvencies in Q4 of 2023 – a rise of 14 per cent in the total number of such insolvencies compared to the same period in 2022.

Big increase in the number of bankruptcies

David Bridge (pictured right), Bristol-based associate director in Evelyn Partners’ restructuring and recovery services team, said: “Year on year, there were 45 per cent more bankruptcies in the region in 2023 than in 2022, which is a worrying trend.

“Numbers for the quarter are highest in the Bristol and North Somerset areas (both 17), followed by South Glos (10) and BANES (8). This league table is mirrored over the previous 12 months.”

“The personal statistics show that interestingly, despite significant volatility over the past few years, the total number of personal insolvencies is now broadly in line with pre-pandemic levels.

“Although Individual Voluntary Arrangement (IVA) numbers continue to fall, this drop is offset by increasing numbers of Debt Relief Orders (DROs) and Breathing Space applications.

“It is clear from the number of Breathing Space applications that this tool is providing a helpful moratorium for many people in financial difficulty. However, as we cannot see what follows the Breathing Space, it remains unclear whether this temporary relief from creditor action will provide the longer-term solution or simply delay a formal insolvency procedure.

“This could just be a sticking plaster that temporarily masks a high number of IVAs and bankruptcies that could follow later on.”

Dramatic increase in number of creditors’ voluntary liquidations

Nigel Fox (left), Bristol-based director in the restructuring and recovery services team at Evelyn Partners, said: “It should be noted that further analysis of these latest figures reveal a dramatic increase of just over 80 per cent in the number of creditors’ voluntary liquidations in this period when compared to the same period in 2019, the last quarter before the pandemic hit.

“There are no doubt a number of reasons behind this surge in creditors’ voluntary liquidations, but part may be due to smaller companies trying to recover from the pandemic and paying off Covid-19 related loans being hit by increasing costs.

“This is in contrast to the fall in the numbers of administrations and company voluntary arrangements between Q4 of 2019 and 2023, which are the insolvency procedures often used to rescue a business or company.

“Smaller companies tend not to have the same reserves as larger companies, so cannot weather the combination of the current high levels of inflation, interest rates and energy costs.

“Professional advice should be sought as early as possible, in order to maximise the likelihood of a rescue before it is too late. The earlier that advice is sought then the greater number of options there will be for the business.”