The ½Û×ÓÊÓƵ GLP Index - which looks at growth for legal practitioners across multiple practice areas - took an in-depth look at statistics and other factors to measure change across restructuring and insolvency law for 2023.
Data shows that work is picking up again for legal professionals working in the restructuring and insolvency space. The latest government figures show company insolvencies are higher now than before the pandemic - as are the number of individuals filing for bankruptcy.
While the government’s various loan schemes helped companies and individuals stay afloat during the pandemic, a growing number of individuals and companies are now in the red.
The GLP Index looked at everything from company insolvencies to compulsory liquidations, director disqualifications, individual bankruptcies and dozens more.
Pulling all the data points together, the Index revealed that restructuring and insolvency law is projected to grow in 2023. The demand for restructuring and insolvency law plummeted during the lockdown. After falling -18% in 2020 and then again by -12% in 2021, the practice area is expected to grow by +9% in 2022 and by +2% in 2023.
The total number of companies that registered insolvency in 2022 was 22,109, the highest number since 2009. This number is also 57% higher than the 14,059 in 2021.
According to The Insolvency Service, the rate at which active companies went into insolvent liquidation kept escalating to one in 202 active companies in 2022. This rate increased from 32,9 per 10,000 active companies that entered liquidation in 2021 to 49,5 per 10,000 in 2022 - even higher than 41.9 per 10,000 in 2019.
The Insolvency Service says this increase can be attributed to the highest annual number of Creditors’ Voluntary Liquidations (CVLs) since the start of the series in 1960.
Get legal guidance on corporate insolvency processes here.
Although the number of directors being disqualified has dropped significantly since the pandemic, the number of directors being prosecuted has shot up.
½Û×ÓÊÓƵ found that the number of convicted directors jumped considerably to 123 in 2021-2022 from 57 in 2020-21.
An explanation for the increase in directors being prosecuted is the Government’s Bailout Loan Scheme (introduced in March 2021) which allowed small businesses to borrow up to £50,000. Unfortunately, some directors have been accused and convicted of foul play when borrowing these sums.
The GLP Index identified individuals declaring bankruptcy as another clear line of work for legal professionals in the restructuring and insolvency space.
The of individuals declaring individual voluntary arrangements (IVAs) has risen steadily in recent years - jumping by more than 10,000 individuals per year when comparing 2022 (87,969) to 2019 (77,940).
According to The Insolvencies Service, there were 7,233 IVAs registered per month on average in the three months ending December 2022 - a 9% increase from the three-month period ending December 2021 and 26% higher than the three months ending December 2019.
Get legal guidance on bankruptcy and individual insolvency.
In the current economic climate, growth in the restructuring and insolvency law practice area is not surprising, given the increase in corporate insolvency and individual bankruptcies we hear about daily. An overview of all the data and findings relevant to restructuring and insolvency law supports the projected growth of 2% in the practice area.
To see the GLP Index findings and predictions for the demand for legal services in other practice areas, go to The legal sector in 2023 report.
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