Rising Insolvency disputes reflect UK economic woes

New Insolvency claims are flooding into the UK High Court, surpassing last year’s total and underscoring the severe economic challenges facing the nation.

While overall claims in the High Court have seen a slight fall, as reported in Solomonic’s H1 review, there has been no let-up in the Insolvency and Companies List (formerly known as the Companies Court).

The volume of new applications has already exceeded last year’s activity levels by 10% (9,951 compared with 9,036). This is despite the 2022 figure already being almost double the 4,651 applications in 2021. Extrapolating from past data, the total could hit 13,000 by year end. The underlying causes are a sluggish economy which has yet to recover from the Covid-19 pandemic and there is currently no sign of any respite.

Delving into the data reveals the primary driver of this surge - winding up petitions, representing a small majority of all applications. Solomonic previously reported an uptick in winding up petitions last year and earlier this year, and the trend has continued unabated. In fact, these tough conditions continue to batter UK businesses as September witnessed the highest spike in new petitions.

With over 5,000 winding up petitions submitted this year, this averages around 25 petitions per working day - an alarming statistic. This surge can be partially attributed to His Majesty’s Revenue and Customs (HMRC), which has adopted a notably tougher approach. HMRC has enforced approximately 43% of these 2023 petitions, a sharp increase from 24% in 2022. This marked shift in stance appears to leave behind any trace of the previous Covid-related restraint.  

The overall trend extends beyond the filing of new claims and is evidenced within court proceedings. So far this year there have been over 9,300 hearings in the former Companies Court, a substantial increase compared to 6,794 hearings in the entirety of 2022 and only 4,273 in 2021. This data highlights the court’s ability to efficiently handle the surging caseload.

The increase in Insolvency and Companies claims, particularly the upsurge in winding up petitions, illustrates the challenges faced by businesses and the uncertainty ahead.

All data correct as of 12:30 12th Oct 2023.