Business insolvencies soar - but so do company births

Northern Ireland businesses have the second lowest insolvency risk in the UK
The Insolvency Service said there were 81 company failures in Northern Ireland in the last three months of 2023

Business insolvencies in Northern Ireland soared by 62% in the final quarter of 2023 compared to the previous year, government figures show.

But on the flip side, more than 13,200 start-ups were launched over the last 12 months.

There were 81 company insolvencies in the north in the October-December period, according to the Insolvency Service, taking the total number of business failures over the calendar year to more than 200.

The latest quarterly total comprised 33 compulsory liquidations, 38 creditors’ voluntary liquidations (CVLs), three company voluntary arrangements (CVAs) and seven administrations. There were no administrative receiverships.

The figures were broadly similar to pre-pandemic levels, and predictions of a tsunami of insolvencies, especially among among smaller businesses, remained relatively unfounded.

The latest insolvency statistics for England and Wales revealed the highest quarterly number of CVLs since the start of the time series in 1960, and a 14% increase in business failures in 2023 compared to 2022.

Oliver Collinge, director at restructuring and insolvency firm, PKF GM, said: “There is no doubt that higher interest rates and continuing cost pressures have seriously impacted many UK businesses, with one in 186 active companies entering insolvent liquidation in 2023.”

Meanwhile more than 13,200 start-ups were launched in Northern Ireland in 2023, according to separate research from the UK’s insolvency and restructuring trade body R3.

Its analysis of data provided by Creditsafe shows 13,280 firms were set-up in Northern Ireland in 2023 – a rise of 59.5% from the 2022 total of 8,325.

November was the month with the highest number of start-ups at 1,597.

Northern Ireland saw the largest yearly percentage increase in start-up numbers across the UK regions and nations, followed by Greater London (up 14.7%), Wales (13.8%) and the West Midlands (13.8%).

Ian Leonard, chair of R3 in Northern Ireland

Ian Leonard, chair of R3 in Northern Ireland, said: “Economic activity in Northern Ireland is well above pre-pandemic levels, with its recovery outpacing the UK as a whole and this has been a major contributor to the rise start-ups we saw last year.

“Many of these new ventures are micro and small businesses, owned and run by local people, and will play a crucial role in supporting the growth of Northern Ireland’s economy in the year ahead.”

Ian, who is a director at Interpath Advisory, added: “However, setting up a new business is just the first step – directors need to stay alert to any signs of financial distress and act accordingly should they arise.

“Problems paying the bills or staff on time, stock levels piling up and falling revenue are all early indicators a business could be in trouble, and at this point it’s essential to seek advice from a qualified source, whether you’re running a start-up or a more established business.

“Many R3 members in Northern Ireland are happy to provide a free initial consultation to learn more about your concerns and help you understand the options you have for resolving them.”