NW corporate insolvencies fall, but fears it could be ‘temporary respite’

The number of companies filing for administration across the North West has fallen by 20% year-on-year.

This is despite a sluggish economy, the cost-of-living crisis, high interest rates and ongoing geopolitical uncertainty continuing to impact businesses across the region.

Analysis of notices in The Gazette by Interpath Advisory reveals that a total of 48 companies based in the North West fell into administration in the third quarter of 2023, down from 61 companies in the same period the previous year. This represents a 21.3% decrease on last year.

This contrasts the the UK picture which saw a total of 330 companies fall into administration in Q3 2023, up from 276 companies in Q3 2022, a 19.6% increase on last year, and further evidence that UK insolvency activity is now back to pre-pandemic levels following the record lows seen during 2020 and 2021.

Rick Harrison, managing director and head of Interpath’s team in the North West, said: “Whilst the lower level of administration appointments in the North West is welcome news, concerns remain that this may be a temporary respite, and that a steady uptick in insolvency activity will soon be back on the cards.

“In recent months there has been a noticeable shift in approach from creditors, including HMRC, lenders and landlords as well as from credit insurers.

“Whilst many previously preferred forbearance and restructuring to enforcement, we are starting to see more and more action taken in the form of winding up petitions.”

He added: “As a result, at Interpath, we are seeing a marked increase in restructuring advisory work across the mid and upper-mid market. This has not translated into a higher number of insolvencies at this stage, but does suggest an increase in the pressures local businesses are facing.”

The rising number of UK insolvencies in Q3 2023 can be seen across a wide range of sectors, with companies operating in the building and construction, professional services, manufacturing, retail and real estate industries experiencing a notable number of appointments.

High profile insolvencies seen across the North West during Q3 2023, included the pre-pack sale of the Skelmersdale-based footwear retailer, Hotter Shoes.

Rick Harrison added: “Q4 is the so-called ‘Golden Quarter’ for retailers, and many will be hoping that recent data around falling inflation and a pause in interest hikes will be enough to tempt shoppers to spend.

“All eyes will be on the crucial Black Friday and Cyber Monday events in November, as an early indicator for what Christmas trading might bring.”

Looking ahead to the outlook for the remainder of 2023, he said: “With the Chancellor ruling out the possibility of tax cuts this autumn, wider geopolitical events, and a 2024 General Election on the cards, the outlook for our regional businesses remains precarious.

“As cost of living pressures and sluggish economic growth are likely to continue, a combination of short term cash visibility, and long term planning will be critical for businesses and management teams to ensure they remain resilient.”