Why Europe Must End Its 30-Year Digital Winter to Ensure Its Long-Run Future

Bankruptcy Experts Predict ‘Big Year for Insolvency’ in 2024

Insolvency experts are reportedly gloomy about what 2024 will bring big companies.

These firms will face continued high borrowing costs and reduced consumer spending, with tech companies among those facing financial upheaval, the Press Association reported Sunday (Dec. 31), citing interviews with industry experts.

The report cited figures from the U.K.-based Insolvency Service which showed the total of company failures over the first 11 months of last year was more than reported during all of 2022. 

“We are expecting next year to be a big year for insolvency,” Rob Hornby, partner and managing director of AlixPartners, told the news outlet. “That is likely to be across the board, both in terms of geographies and sectors. I personally think we are definitely seeing an element of the dotcom bubble repeating itself.”

Hornby added that since before the pandemic, there was a lot of investment money available as venture capital firms worried they were missing out, with some areas of techs getting a glut of funding, more than could succeed in the long term.

“Now some of that funding is running dry, you will start to see consequences,” he said.

The report also includes comments from PwC’s head of insolvency David Kelley, who noted that both the construction and business services industries each saw nearly 20% of insolvencies last year, leading him to forecast that those sectors will “remain the hardest hit in 2024.”

Meanwhile, another 17% of all insolvencies came from the hospitality sector and 14% involved retailers, the report said.

PYMNTS looked at the recent rise of bankruptcies last week, noting that digital disruption is no guarantee against a company hitting tough times.

Among companies filing for bankruptcy last year was Plastiq, which raised more than $142 million in funding, and owed more than $50 million to creditors. Following its bankruptcy proceedings, it was acquired in August by Priority Technology Holdings.

And the embedded finance firm Railsr, as reported last year, was sold to a consortium of global investors after declaring bankruptcy in March. Last year, the company raised $24 million.

And it’s not just bigger companies under pressure. PYMNTS reported in November on the stark state of small businesses, after census data showed that projected business formations for October fell 4% versus September, with the accommodation and food services, construction and professional services sectors all showing fewer business applications.