Bishop & Sewell

As we now know from official figures released last week the headline rate of inflation is still above 10%. It looks likely that the Bank of England will have to continue putting up UK interest rates. If it did so next month it would be the Monetary Policy Committee’s twelfth consecutive increase, writes David Little, a partner in our Corporate and Commercial Law team and Stephen Wade, a Partner specialising in insolvency and debt recovery in our Dispute Resolution Department.

More companies in England and Wales entered insolvency during March than at any point since monthly records started three years ago, according to official data that showed a 16 per cent increase on a year ago.

The rate of companies falling into insolvency fell sharply with the onset of the Covid-19 pandemic, thanks to government support programmes and lockdowns slowing the progress of courts handling insolvency cases.

But with companies facing rising costs and a sluggish economy, insolvencies are again on the rise. Reported by Reuters, David Kelly, Head of Insolvency at accountants PwC, said, “Businesses are struggling to secure financing and pay off their loans due to high interest rates and the wider impact inflation and consumer sentiment is having on sales and cash flows. Company insolvencies will likely continue to rise in the short term, making for a challenging spring.

“Company insolvencies will likely continue to rise in the short term, making for a challenging spring. This is particularly the case following the collapse of Silicon Valley Bank, which has caused lenders to reassess risk appetites. However, hard hit sectors like hospitality and leisure might soon begin to reap the benefits of the weather improving, so we hope to see the number of insolvencies in these sectors dip.”

Gareth Harris, partner at RSM UK Restructuring Advisory, speaking to CityAM, said: ‘It is clear from these latest numbers and our increasing workloads that while we may not be in a technical recession, the economic headwinds are continuing to bite.

“Although some confidence is returning in the wider economy those companies that are struggling are clearly seeing less options available to them than in the last four years. The majority of the current insolvency figures remain “shut-down” style liquidations of smaller companies which we expect to peak soon before falling in the second half of the year.”

It’s difficult to disagree with both these experts. Businesses are coping with high energy bills, increasing interest rates and detrimental inflation, alongside little to no government support. With trading conditions still so punishing, we should all anticipate higher than-usual levels of insolvency for some time to come.

If you have concerns for your own business or personal circumstance it’s always prudent not to leave it too long before seeking professional support.

Contact a member of our team

Stephen Wade, is a Partner specialising in Insolvency and Debt Recovery in our expert Dispute Resolution team. You can contact him on 020 7692 7578 or you can email him on

David Little is a Partner at Bishop & Sewell in our expert Corporate & Commercial team. If you would like to contact him, please quote Ref CB393 on either 020 7631 4141 or email

The above is accurate as at 24 April 2023. The information above may be subject to change during these ever-changing times. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.

Category: Blog, News | Date: 24th Apr 2023

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