EY comments on today’s Insolvency Service Q3 2023 company insolvency data

Simon Edel, UK Turnaround and Restructuring Strategy Partner at EY-Parthenon: 

“Today’s insolvency figures illustrates how the challenging trading conditions facing UK companies is translating into distress. Company insolvencies in Q2 and Q3 2023 reached their highest level since Q2 2009, whilst administrations saw a 58% year-on-year uplift.  

“Since the pandemic, insolvency activity had been heavily focused among smaller companies, but we are now seeing increased activity in the mid-market as macro-economic and financing stresses build.  

“These mid-market companies – whose balance sheets had previously been cushioned by extended maturities and COVID-19 support measures – are now facing several liabilities, including the repayment of pandemic loans, higher refinancing hurdles and ongoing, supply, cost and interest rate pressures.  

“This stress is manifesting in rising profit warnings and mid-market administration appointments. EY-Parthenon’s latest Profit Warnings report for Q3 found that a third (33%) of profit warnings during the quarter came from mid-market listed companies – the highest proportion of warnings from this group in almost thirteen years.   

“The rise in corporate-led restructuring activity is also significant among ‘large cap’ companies, where the focus is still largely on refinancing and liability planning. 

“It is critical that companies adapt their financial and operating structures to fundamental changes in their market and the rising cost of capital by contingency planning and seeking board advice – delaying action risks affecting value.”