Menzies & Company Watch podcast: A deeper dive behind the statistics and what is in store for the remainder of 2023
In our latest podcast, the Menzies Creditor Services team and Company Watch took a look at the increased petition levels and what these statistics mean for 2023. To listen to this podcast, please click here. Alternatively, please find a summary as follows:
Insolvencies are on the rise, but what is driving these numbers up?
Winding up petitions?
Applications to petition for a company’s winding up are on the increase:
- 2022 saw an upward trend.
- They peaked at 400 in the month of October.
- Ending the year with 287 in December.
- 2023 continued the upward curve with 362 in January, 510 in February and 474 in March.
Converted applications to an advertised petition:
- Currently running at approximately 73%.
- Six months ago, this was at 56%.
- This means that less are being paid and thus converting to an advertised petition.
- A common sign that leads to an application is when your customer stops communicating with you.
Dissolutions:
Legislation was amended so that directors of a dissolved entity will have their conduct reviewed:
- In the last 12 months there have been some 600,000 dissolutions.
- This compares to the 5,000,000 live businesses that are usually on the register.
- Dissolution numbers usually track insolvencies.
- It is anticipated that dissolutions as a proportion of live businesses may reduce, given this new legislation that is now in force.
- Companies can be restored to the register much easier now, allowing for the directors to be investigated.
Zombie Companies:
A term coined for companies that were only servicing the debt and never growing:
- First spoken about during the financial crisis in 2008.
- On the register there are some 240,000 Zombie Companies.
- Company Watch attribute a definition for Zombie Companies as a company with shareholders’ funds of less than £20,000.
- The total debt for these companies equates to £213 billion, which all needs to be serviced at a higher rate.
- It is likely that many of these companies will face some form of insolvency or require some support.
- The Insolvency Service and the insolvency industry are likely to be at the forefront of this support.
Unemployment:
Unemployment has been low in 2022:
- Many companies have consequently struggled to resource their businesses.
Could this be changing in 2023:
- As there are expected to be more insolvencies, this invariably will lead to more redundancies.
- There is an expectation that unemployment will increase.
- The recruitment pendulum may swing back in the favour of the employer, but these statistics will need to be monitored.
For further information on the above, please click here to listen to our podcast recorded in April 2023.
Alternatively, if you have any questions in relation to any of the topics raised or would like to discuss your specific circumstances, please contact:
Giuseppe Parla, Business Recovery Director, Menzies
gparla@menzies.co.uk
+44 (0) 207 465 1919
Craig Evans, CEO, Company Watch
+44 (0)7413 680 344
