Stats released today by The Insolvency Service unveiled a 1% upturn in company insolvencies in July compared to the month before.
Construction, wholesale, retail, accommodation and Food Service topping the table of struggling industries who are responsible for 47% of all company insolvencies.
In 2024, there were 23,872 registered company insolvencies comprising 18,840 creditors’ voluntary liquidations (CVLs), 3,230 compulsory liquidations, 1,597 administrations, 202 company voluntary arrangements (CVAs) and three receivership appointments.
The total number of company insolvencies in 2024 was 5% lower than in 2023, which saw the highest annual number since 1993.
The change in total company insolvency numbers in 2024 was mostly driven by CVLs, which were 8% lower than the record high numbers seen in 2023.
The number of compulsory liquidations increased by 14% from 2023 and was at the highest level since 2014. Administrations (up 2%) and CVAs (up 9%) were both higher than in 2023.
One in 191 companies on the Companies House effective register (at a rate of 52.4 per 10,000 companies) entered insolvency in 2024, a decrease from the 57.2 per 10,000 companies that entered insolvency in 2023.
The 2024 insolvency rate is much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession, even though 2023 and 2024 saw similar numbers of insolvencies to 2008 and 2009.
This is because the number of companies on the effective register has more than doubled.
Freddy Khalaschi, Business Recovery Partner at Menzies, warns the heat is on the Chancellor to fix Britain’s business struggles.
Khalaschi warned, “The summer heat is bearing down on British businesses.
“Thames Water’s reserves are drying up, Claire’s has fallen into administration, River Island narrowly avoided the same fate after the Court agreed a restructuring plan, and more than 1,000 pubs and restaurants have gone under since the last Budget.
“Consumer confidence remains fragile, house prices are falling and falling job vacancies suggest that businesses are cutting back, with hiring costs rising, and with AI and automation starting to make their presence felt.
“Beyond printing money, the government’s only real lever was to cut interest rates to ease the pressure on struggling businesses.
“Growth is likely to remain subdued for some time, and so all eyes are now on the next Budget to deliver stability for businesses and put more cash in consumers’ pockets, so that we can start to nurture green shoots of recovery.
“For firms facing falling sales or mounting debts, the best advice is to act early. Address cashflow constraints quickly and seek expert advice, so that you have the widest possible range of options to protect profitability and keep trading.
Simon Edel, UK Turnaround and Restructuring Strategy Partner at EY-Parthenon, said: “Alongside the latest company insolvency data, we note there has been a significant rise in the number restructuring plans, with more sanctioned plans in July (13) than throughout the entirety of 2024 (nine).
“There has also been a 24% increase in administration activity compared to June, which is 5% higher than July 2024. The month-on-month rises in insolvency activity and Creditors’ Voluntary Liquidations (CVLs) last month – while small – are a further indication that companies continue to be challenged by relentless uncertainty, as geopolitical tensions and recent policy shifts hit business confidence, delaying decision-making and dampening spending.
“In addition to formal restructuring processes, our recent Restructuring Pulse survey revealed an increase in consensual restructuring transactions to save businesses.
“Many businesses are also contending with higher costs including recent increases to employer National Insurance Contributions and the National Living Wage. With interest rates still relatively high – alongside significant working capital demands and a constrained credit environment – liquidity pressures are intensifying for more UK companies. This is causing more businesses and stakeholders to call time.
“In the weeks and months ahead, companies should remain focused on strengthening liquidity to ease debt pressures. They need to demonstrate a reliable and measured scenario-based forecasting approach, alongside a robust trading performance, to build stakeholder confidence and avoid facing any difficulties when it comes to refinancing.”
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