Company Insolvency Snapshot – UK

Welcome to the latest C.I.S. (company insolvency snapshot) from wesellanycompany.com, your weekly guide to the main insolvency news and opportunities throughout the UK.

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This week:

Covid – 19 gives way to the Cost of Living Crisis as the largest financial mountain to climb for both businesses and individuals across the country.

Small business owners in the UK face a variety of threats, with supply chain delays being the most common. These delays are often caused by global shortages of materials, staff shortages, and transport delays, which can occur simultaneously with spikes in demand. However, insolvency is also a major concern for small businesses. Rising energy costs and food prices have put a strain on businesses in Manchester, who must balance the need to maintain quality with the need to keep prices competitive. While some businesses may choose to pass on these costs to consumers, this can be a risky move during a time of economic uncertainty.

The economic impact of Covid-19 and the rising cost of living has led to a surge in insolvency among businesses. While competition has always been a part of the market, the current situation has made it an unfair fight for many companies struggling to stay afloat. As a result, we are seeing more and more businesses closing their doors and sharing their struggles on social media.

The recent closures of beloved restaurants, bars, and small businesses in Manchester have raised concerns about the city’s economic stability. Not only have newly opened venues struggled to stay afloat, but even long-standing institutions have been forced to shut down. The Font, Cocktail Beer Ramen + Bun, Ate Days A Week, and Sale Foodhall are just a few examples of the recent wave of closures. As insolvency continues to plague the hospitality industry, the future remains uncertain for Manchester’s businesses.

Insolvency is a common issue plaguing the hospitality industry, with businesses in Manchester frequently announcing their closures on social media. Ate Days A Week, a popular pie maker, cited rising food and drink costs, exorbitant utility expenses, and an uncertain economic landscape as reasons for their closure in January. These challenges continue to pose significant obstacles for businesses in the industry.

Insolvency is becoming a growing concern for small businesses in Manchester. Towergate Insurance conducted a survey of 750 small business owners across the UK to investigate the challenges they are facing due to the rising cost of living. The survey revealed that 67% of Manchester business owners feel that their business is at risk of closure this year, which is 10% higher than the national average of 57%. This highlights the urgent need for support and solutions to help businesses in Manchester stay afloat during these challenging times.

As Aartee row continues, Steel Tycoon Gupta faces a winding up petition.

A recent acquisition by Sanjeev Gupta’s GFG Alliance has hit a snag as administrators attempt to wind up Aartee Bright Bar. The steel tycoon’s ongoing dispute with one of his major UK customers has escalated with the filing of a winding-up petition against Aartee Group Holdings Limited and an application for A&M to be appointed as administrator to Aartee Steel Group Limited. Despite being acquired just weeks ago by GFG Alliance, which operates under various names including Liberty Steel in the UK, both companies are now facing insolvency.

The financial troubles of Mr. Gupta’s group have led to two of its entities owing Aartee Bright Bar almost £14m. Aartee Bright Bar is currently undergoing an administration process being managed by A&M. Employees at Aartee Bright Bar were informed of the situation a few days ago. A source close to GFG stated that the intercompany balances between the Aartee group companies existed before GFG’s ownership of them by more than a decade. However, A&M’s efforts to wind up one of the companies and place the other in administration highlight the corporate turmoil that GFG is currently facing.

Monthly insolvency statistics FEB 2023

When analysing insolvency statistics, it’s important to keep in mind that the numbers provided in this post are not seasonally adjusted. This means that changes between consecutive months may not necessarily indicate overall trends. To get a more accurate picture of trends over time, it’s recommended to compare to the same calendar month in previous years or to look at the quarterly insolvency statistics, which are seasonally adjusted.

Latest company insolvencies…

The latest data on company insolvencies shows a concerning trend. In February 2023, there were 1,783 registered company insolvencies, which is a 17% increase from the same month in the previous year and a 33% increase from pre-pandemic levels in February

While compulsory liquidations were 32% lower than in February 2020, there were still 158 in February 2023, more than twice the number in February

This increase is partly due to an uptick in winding-up petitions presented by HMRC. These figures suggest that many companies are still struggling to recover from the economic impact of the pandemic.

The number of insolvencies has been on the rise since the pandemic hit. In February 2023, there were 1,505 Creditors’ Voluntary Liquidations (CVLs), which is a 13% increase from February 2022 and a 59% increase from February

However, the number of administrations and Company Voluntary Arrangements (CVAs) remained lower than before the pandemic. On the individual level, there were 580 bankruptcies registered in February 2023, which is 3% lower than in February 2022 and 63% lower than in February

Debt Relief Orders (DROs) also decreased, with 2,083 registered in February 2023, a 7% decrease from February 2022 and a 13% decrease from February

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