Insolvency in 2023

The insolvency profession is facing a crossroads due to regulatory upheaval, recruitment, and skills challenges, despite its potential to benefit from the growing need for post-pandemic business turnaround and insolvency expertise. Government support measures, including furlough and Bounce Back Loan schemes, minimised the business fallout from the pandemic while masking the true scale of failing companies artificially kept afloat. With their gradual withdrawal, corporate insolvencies rebounded to near pre-pandemic levels, rising at their fastest rate since 2012.

The Allianz Global Insolvency Report predicts that global business insolvencies will rebound by +14% in 2023, approaching their pre-pandemic level. In the UK, the withdrawal of state support is predicted to result in a sharp insolvency rebound in 2023, with a 37% year-on-year rise to 22,305 cases. The insolvency profession is poised to benefit from the growing need for business turnaround and insolvency expertise. However, the task facing IPs is daunting, as they face a rush of failures and the need to identify those that can be restructured outside a formal procedure.

The regulatory landscape is poised for upheaval as the government consultation on the future of insolvency regulation goes through the motions, including the concept of a single state regulator for insolvency to replace the existing recognised professional bodies (RPBs). Caroline Sumner, CEO of insolvency industry body R3, is concerned that there is insufficient evidence to support the extent of the current regulatory reform proposals.

The profession also faces significant recruitment challenges due to concerns about the attractiveness of the profession to new recruits. Perceptions of its attractiveness aside, the combination of too much work, too few resources and far too many ‘empty’ cases with insufficient realisable value to reward them adequately for their work are creating a perfect storm.

Helping company directors better understand the business recovery and business rescue process is key, especially in economic uncertainty. Key creditors, such as HMRC, need to become much more comfortable with actively voting on restructuring plans and rescue processes and taking a commercial view.

Ian Fletcher moved into the specialist recruitment field over 20 years ago. He has extensive experience recruiting for organisations interested in reward, insolvency, incentives and corporate recovery. He has worked with some of the largest businesses in the UK.

Harvey Sutton, established in 1990, is one of the leading recruiters for Reward and Insolvency professionals.