Insolvency Service sends out positive message
The latest stats from the Insolvency Service show company insolvencies jumped by 40% year-on-year over the past quarter to 30 September 2022. With 5,595 registered company insolvencies over the three-month period.
Christina Fitzgerald, president of insolvency and restructuring trade body R3, commented: “Two years of economic turbulence are translating into a rise in corporate insolvencies. It seems inevitable that numbers will increase in the coming months as the state of the economy, increased costs, and people’s reluctance to spend money because of the cost of living, deal a further blow to those businesses that have struggled since the beginning of the pandemic.”
However, it’s not all doom and gloom. The Insolvency Service is getting plaudits for the help it’s giving distressed companies, and the manner in which it is delivering it.
In its latest Customer Satisfaction Survey 2022, the agency received an overall satisfaction score of 84%, an increase of one percentage point compared with 2020/21.
The Insolvency Service also received a 93% approval rating from people who had applied for a debt relief order, and satisfaction levels among non-institutional creditors – historically the least satisfied group – increased from 71% to 82%.
Positive feedback was also received from people claiming redundancy payments, who said that decisions had been clearly explained to them. While people in debt were positive about the professionalism of customer service representatives and the accuracy of the information provided.
The Insolvency Service Annual Report and Accounts 2021-2022 contained more good news, with the success of the Breathing Space scheme, launched in May 2021. The scheme allows people in financial distress to obtain a period of protection from enforcement action by their creditors.
The report said: “By the end of the year , we had received over 58,400 successful applications, which included over 900 people in a mental health crisis situation. In addition, extending the monetary eligibility criteria to obtain a debt relief order has enabled an additional 6,500 of the most financially vulnerable individuals to obtain relief from their debts, with over 22,600 orders made during the year.”
The Insolvency Service also introduced guidance for directors of micro and small businesses to help identify the early warning signs of financial trouble, with signposting for where to get advice and information about their responsibilities as directors, to help prevent financial misconduct.
The report added: “Our core objective is to deliver economic confidence by supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors.
“Our Official Receivers deal with people subject to bankruptcy and insolvent businesses, realising and distributing assets, helping people to get back on their feet, and carrying out investigations to support the integrity of the insolvency system and the wider business and lending economy.”
It achieved one of its key objectives of ensuring “the insolvency regime supports individuals and businesses to help with the economic recovery as the country emerges from the pandemic.
Its report said: “We worked closely with stakeholders as part of the government response to help ensure that businesses impacted by pandemic related restrictions were supported to avoid unnecessary insolvency. We worked to ensure that the temporary legislative measures put in place as part of that support remained in place only for as long as necessary.
It also extended Debt Relief Orders to support more vulnerable people in problem debt. 6,500 more people were eligible to obtain debt relief through this route than otherwise would have been the case.
In tough times, the Insolvency Service is sending out a positive message: that it, and the wider insolvency sector, can and is helping businesses in distress.
If you’re worried about the financial state of your business then seek the help of a licensed insolvency practitioner. Remember, the word ‘insolvency’ is not a synonym for ‘bankruptcy’. Taking expert advice at the earliest opportunity will give you the best chance of ‘turning around’ your company.