UK Insolvency Statistics

Overview of Insolvencies in November 2024
In November 2024, the Insolvency Service reported 1,966 registered company insolvencies in England and Wales. This represents:

• A 13% increase compared to October 2024 (1,743).
• A 12% decrease compared to November 2023 (2,243).

Despite this year-on-year decrease, insolvency levels remain significantly higher than pre-pandemic levels recorded between 2014-2019.

Breakdown by Insolvency Types

The 1,966 insolvencies in November 2024 were composed of:

• 1,565 Creditors’ Voluntary Liquidations (CVLs) – the most common type of insolvency.
• 254 Compulsory Liquidations – an increase from previous months.
• 132 Administrations – used for business recovery or sale.
• 14 Company Voluntary Arrangements (CVAs).
• 1 Receivership appointment.

Notably, all types of insolvency, except receiverships, showed increases compared to October 2024.

12-Month Rolling Insolvency Rate

In the 12 months ending November 2024:

• 1 in 189 companies entered insolvency.
• This equates to 52.9 insolvencies per 10,000 companies, down from 57.3 per 10,000 in the year ending November 2023.

While insolvency rates have climbed since the 2020-21 lows, they remain below the peak of 113.1 per 10,000 during the 2008-09 recession. The growth in the Companies House effective register, which has more than doubled since 2009, contributes to this comparatively lower rate.

Historical Context and Trends

The current trends in insolvency reflect multiple economic challenges, including:

1. Rising Operational Costs – Businesses continue to face high energy prices and inflationary pressures.
2. Interest Rate Hikes – Increased borrowing costs add strain to businesses with significant debt.
3. Reduced Consumer Spending – A tightening of household budgets impacts businesses, particularly SMEs.

Regional and Sectoral Variations

• Insolvencies were notably high in sectors most impacted by economic fluctuations, including construction, retail, and hospitality.
• Regional disparities exist, with urban centers experiencing higher insolvency rates due to greater business density.

Comparison to Pre-Pandemic Levels

The insolvency numbers for November 2024, while elevated compared to 2014-2019, are yet to match levels seen during the global financial crisis. However, structural shifts in the economy, such as digitization and sectoral transitions, have resulted in volatile insolvency trends post-COVID-19.

The latest UK insolvency report, covering data up to October 2024, reveals several key trends in company insolvencies across England and Wales.

Overall Decline in Company Insolvencies

In October 2024, there were 1,747 company insolvencies in England and Wales, representing a 10% decrease from September 2024 and a 24% decrease compared to October 2023. This decline suggests a potential easing of financial pressures on businesses.

Breakdown by Insolvency Type

• Creditors’ Voluntary Liquidations (CVLs): CVLs accounted for 83% of all company insolvencies in October 2024. The number of CVLs decreased by 7% from September 2024 and was 24% lower than in October 202

• Compulsory Liquidations: The number of compulsory liquidations in October 2024 was 14% lower than in September 2024 and 20% lower than in October 2023. This indicates a reduction in court-ordered company closures.

• Administrations: Administrations decreased by 35% from September 2024 and were 28% lower than in October 2023, suggesting fewer companies are entering this form of insolvency.

Insolvency Rate Per 10,000 Companies

Between November 2023 and October 2024, one in 186 companies (a rate of 53.8 per 10,000 companies) entered insolvency. This is a decrease from the 56.5 per 10,000 companies that entered insolvency in the 12 months ending October 2023. While the insolvency rate has increased since the lows seen in 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies observed during the 2008-09 recession.

Sector-Specific Trends

The construction, hospitality, and retail sectors have been among the hardest hit, with higher insolvency rates compared to other industries. These sectors continue to face challenges such as high interest rates and increased costs due to rapid inflation in 2022 and 2023.

Regional Variations

While the report primarily focuses on England and Wales, it’s noted that Scotland and Northern Ireland, which have different insolvency laws, reported a 4% annual fall and a 13% annual rise in insolvencies respectively in June 2024.

Economic Context

The decline in insolvencies may be attributed to businesses adapting to challenging economic conditions, including high interest rates and inflation. However, the overall number of companies entering insolvency remains higher than pre-pandemic levels, indicating ongoing financial pressures.

In summary, the latest UK insolvency report indicates a decrease in company insolvencies in October 2024 compared to previous months and the same period last year. Despite this decline, certain sectors and regions continue to experience higher insolvency rates, reflecting ongoing economic challenges.

The Insolvency Service’s September 2024 report shows that total company insolvencies rose by 2% from August, although the figures were 7% lower than in September 2023. The UK insolvency statistics highlight how companies are navigating a complex economic landscape. Creditors’ Voluntary Liquidations (CVLs) continue to dominate insolvency cases, representing about 80% of all insolvencies in September. CVLs allow directors to voluntarily close their companies in a controlled way, providing an alternative to compulsory liquidation, which creditors typically initiate.

While CVLs have remained consistent, compulsory liquidations show a slightly different trend. Compulsory liquidations rose dramatically in 2023 as post-pandemic restrictions on winding-up petitions were lifted, allowing creditors more freedom to seek repayment. Administrations have also seen a sharp 40% increase from August to September, alongside a 19% year-on-year rise. This trend suggests that businesses are increasingly opting for restructuring, reflecting a proactive approach to managing financial instability.

How Do Current UK Insolvency Rates Compare Historically?

The significance of these insolvency figures becomes clearer when viewed in a historical context. During the 2008–09 financial crisis, UK insolvency rates rose sharply but stabilised in the years that followed. There were modest increases in 2018 and 2019, but insolvencies dropped to record lows during the COVID-19 pandemic, when government support measures and restrictions on creditor actions were in place. Once these measures ended, however, insolvency numbers surged, reaching record highs in 2023. Many businesses are now dealing with a combination of inflation, high borrowing costs, and shifting consumer behaviour, creating a challenging environment for stability and growth.

In 2023, UK insolvency rates reached levels last seen during the global financial crisis. Retail, hospitality, and construction businesses have been particularly vulnerable due to their reliance on stable consumer demand and lower cost structures. This surge highlights the need for businesses to have effective insolvency solutions and a proactive approach to managing financial distress.

What Are the Key Types of Insolvency, and How Do They Differ?

How Do Creditors’ Voluntary Liquidations (CVLs) Work?

Creditors’ Voluntary Liquidations (CVLs) are a commonly chosen insolvency option, particularly for businesses unable to manage debt obligations. In September 2024, CVLs accounted for 80% of all insolvency cases. CVLs enable directors to wind down the company voluntarily, allowing them to maximise asset recovery for creditors and avoid some of the harsher consequences of compulsory liquidation. For many small and medium-sized enterprises (SMEs), CVLs provide a constructive exit from the market and a relatively straightforward means to manage debts.

FWJ provides crucial support to businesses considering CVLs, offering guidance that enables directors to navigate the CVL process effectively. Our experience ensures that directors fulfil their legal obligations while achieving the best possible outcome for creditors and stakeholders. FWJ’s team helps clients understand each step of the process, from asset realisation to final distribution, ensuring a smooth and compliant transition.

Why Are Compulsory Liquidations Increasing?

Compulsory liquidations are a more severe form of insolvency, typically initiated by creditors who are seeking repayment. Following the lifting of pandemic restrictions, compulsory liquidations in 2023 increased by 44% compared to the previous year. Although numbers in September 2024 were slightly down from August, compulsory liquidations have still risen from their pandemic lows, reflecting the financial strain many companies face due to creditor pressures and challenging economic conditions.

For businesses facing compulsory liquidation, FWJ offers essential support in defending against winding-up petitions and negotiating with creditors. Our team has extensive experience helping directors understand their options, often working to implement alternative solutions that avoid the harsh outcomes of compulsory liquidation. By developing strategies like Company Voluntary Arrangements (CVAs), FWJ offers a lifeline to businesses in distress, helping them stabilise and regain control.

What Does the Rise in Administrations and CVAs Mean?

The sharp rise in administrations indicates that more businesses are pursuing restructuring as a means of avoiding closure. Administration is a legal process in which an appointed administrator takes control of the company, working to protect it from creditor actions and facilitating a financial restructuring. This option is often suitable for businesses with strong core operations that require temporary relief to reorganise their finances.

Alongside administration, Company Voluntary Arrangements (CVAs) have also gained importance. CVAs allow businesses to negotiate debt repayments with creditors while continuing operations. Though CVA usage remains lower than other insolvency options, its role is growing as more companies explore alternatives to liquidation. FWJ’s advisory team provides businesses with tailored guidance on both administrations and CVAs, supporting them through complex restructuring to safeguard jobs and preserve asset value.

What Economic Factors Are Increasing UK Insolvency Rates?

Several economic pressures are contributing to the current rise in UK insolvency rates. The Bank of England’s sustained interest rate increases have led to higher borrowing costs, significantly impacting companies that depend on credit to manage cash flow. These rising costs have strained liquidity for many businesses, making it difficult to maintain financial stability and profitability.

The UK insolvency statistics show inflation has further complicated the financial environment by driving up costs for raw materials, energy, and labour. Sectors that rely on imports, or have high energy or staffing needs, have been especially affected by these inflationary pressures. The retail, hospitality, and construction sectors have faced particular difficulties, as rising costs erode profit margins and limit their ability to stay competitive.

For many businesses, this economic strain is compounded by the withdrawal of government support measures that were available during the pandemic. With government assistance no longer available, some businesses are struggling to adapt to the post-pandemic market environment, where consumer spending remains unpredictable. The combination of high inflation and increased interest rates has led more businesses to pursue liquidation or restructuring, as they struggle to stay viable in a high-cost environment.

The UK Insolvency Service has published the August 2024 company insolvency statistics, providing key insights into the state of UK businesses. In August, there were 1,953 registered company insolvencies across England and Wales, which is 9% lower than July 2024 (2,144) and 15% lower than August 2023 (2,286). Although these figures reflect a decrease, insolvencies remain significantly higher than pre-pandemic levels.

This report delves into the insolvency statistics, offering a comprehensive analysis of the types of insolvency procedures, sector trends, and the broader economic factors influencing insolvency rates.

Key trends in August 2024

Total registered company insolvencies:

1,953 insolvencies were recorded, down 9% from July and down 15% year-on-year. Despite the monthly and annual decreases, insolvency rates remain elevated compared to historical norms.

Creditors’ Voluntary Liquidations (CVLs)

CVLs made up the majority of cases, accounting for 1,542 insolvencies (around 79% of the total).

Compulsory liquidations

There were 279 compulsory liquidations in August.

Administrations

A total of 112 administrations were recorded.

Company Voluntary Arrangements (CVAs)

There were 20 CVAs in August, allowing businesses to restructure debt agreements with creditors while continuing operations.

Sector and regional insights

Although specific sector breakdowns are not provided in the insolvency statistics, industries reliant on consumer spending, such as retail and hospitality, are likely contributors to the high insolvency numbers. Rising operational costs and weak demand continue to challenge these sectors. Similarly, manufacturing businesses face difficulties due to increased production costs and ongoing supply chain disruptions.

On a regional level, insolvency trends often reflect the economic landscape of each area. Regions with higher concentrations of struggling industries, particularly Northern England and Wales, may have seen more insolvencies. In addition, regions where SMEs (small and medium-sized enterprises) are a significant part of the economy tend to experience higher insolvency rates due to these businesses’ heightened vulnerability to economic shocks.

Year-on-year comparison and historical context of company insolvency

The 15% decrease in insolvencies compared to August 2023 marks a positive development, though the figures remain higher than the pre-pandemic levels seen between 2014 and 2019. For context, the peak insolvency rate during the 2008-09 recession reached 113.1 per 10,000 companies. The rate for the 12 months leading to August 2024 stood at 55.5 per 10,000 companies (or 1 in 180 businesses), slightly higher than the 55.4 per 10,000 rate from the previous 12-month period.

Breakdown of insolvency procedures

Creditors’ Voluntary Liquidations (CVLs)

CVLs remain the most common type of company insolvency, representing nearly 79% of the total cases in August 2024. This high percentage suggests that many businesses are voluntarily closing down operations due to financial pressures before they are forced into compulsory liquidation by creditors.

Compulsory liquidations

Compulsory liquidations accounted for 279 cases in August. The rise in creditor-led actions indicates that many businesses have become insolvent to the point where creditors are seeking legal intervention to recover unpaid debts.

Administrations

The 112 administrations in August reflect businesses attempting to restructure or salvage operations before insolvency leads to liquidation. This process is used to give companies a chance to reorganise debt and avoid winding up entirely.

Company Voluntary Arrangements (CVAs)

Although CVAs only accounted for 20 cases, they remain a valuable tool for larger companies facing significant debt obligations. CVAs allow businesses to negotiate terms with creditors and develop a repayment plan, potentially avoiding full insolvency.

Economic factors contributing to company insolvency rates

Several economic factors have played a role in the number of insolvencies during 2024:

High inflation

Continued inflationary pressures have driven up operating costs for businesses, particularly those in energy-intensive sectors. Higher input prices and rising wages have squeezed profit margins.

Interest rate hikes

The Bank of England’s tightening of monetary policy, through consecutive interest rate hikes, has increased borrowing costs for businesses. This has led to higher debt-servicing costs, particularly for companies that rely on loans to finance operations.

Consumer demand

Weak consumer demand has particularly affected retail and hospitality, where discretionary spending has been reduced due to the rising cost of living.

End of Government support schemes

With the expiry of government support schemes such as the furlough programme, businesses no longer have access to financial assistance that helped sustain them through the pandemic. This has exposed many struggling businesses to financial difficulties.

Outlook for the coming months

Looking forward, the UK insolvency landscape is likely to remain challenging. Inflation may continue to pressure businesses by raising operating costs, and the cost of borrowing is expected to stay elevated for the foreseeable future. SMEs, which are more vulnerable to economic shocks, are particularly at risk, especially in sectors like retail and hospitality.

Directors should remain vigilant and seek professional insolvency advice early if they see warning signs of financial distress. Understanding the legal obligations and available options—such as administration or voluntary liquidation—can help businesses manage financial difficulties and potentially avoid compulsory liquidation.

In July 2024, there were 2,191 registered company insolvencies, which is a decrease of 7% from June 2024 but a 16% increase compared to July 2023. The rise in insolvency rates year-on-year is largely due to the persistent challenges businesses face in the current economic climate, such as high inflation, rising interest rates, and sluggish consumer demand. This analysis will break down the data, offer insights into the types of insolvency procedures used, and assess regional and sector-specific trends affecting UK businesses.

Understanding the insolvency trends is critical for business owners, financial professionals, and policymakers, as these trends offer early warning signs of financial distress in the economy. This report aims to highlight the main factors driving these statistics, providing readers with a deeper understanding of the UK’s insolvency landscape.

Key Insolvency Trends in July 2024

The July 2024 company insolvency data reveals several important patterns:

Total Registered Company Insolvencies: A total of 2,191 insolvencies were recorded in July 2024, down by 7% from June but up 16% year-on-year. This suggests that while there was a slight monthly dip, overall insolvency rates are rising compared to last year, reflecting sustained pressure on UK businesses.

Creditors’ Voluntary Liquidations (CVLs)

CVLs continue to be the most prevalent form of insolvency, accounting for 1,691 cases, representing 77% of all insolvencies. This indicates that a majority of businesses are voluntarily winding down due to financial distress.

Compulsory Liquidations

The number of compulsory liquidations rose to 320, which is the highest level since the height of the COVID-19 pandemic. Compulsory liquidations occur when creditors force companies into liquidation, suggesting that more businesses are unable to meet their debt obligations.

Administrations

There were 155 administrations, a process used to restructure businesses to avoid liquidation. This figure indicates that some companies are attempting to survive through reorganisation.

Company Voluntary Arrangements (CVAs)

There were 25 CVAs recorded, allowing businesses to negotiate terms with creditors to pay back their debts over time while avoiding liquidation.

Sector and Regional Breakdown

While the July 2024 insolvency statistics do not offer a detailed sector-by-sector breakdown, industries that are heavily reliant on consumer spending, such as retail, hospitality, and manufacturing, are expected to be overrepresented in the figures. These industries continue to face major headwinds from rising costs, weakened consumer demand, and supply chain disruptions.

In terms of regional variation, areas with higher concentrations of SMEs and those reliant on the aforementioned vulnerable sectors are likely experiencing higher insolvency rates. For example, regions such as Northern England and parts of Scotland, where retail and hospitality are key economic drivers, are expected to see an increase in company insolvencies. Additionally, regions heavily reliant on manufacturing may also be seeing elevated insolvency levels due to rising input costs and weak demand.

Year-on-Year Comparison and Historical Context

Comparing July 2024 to the previous year reveals a 16% increase in the number of registered company insolvencies. This rise is consistent with the broader trend observed since the end of the government’s pandemic support schemes. The withdrawal of measures such as the furlough scheme and government-backed loans has exposed many businesses to financial instability.

Despite the rise in insolvencies compared to last year, the current figures remain below the peaks seen during the 2008-09 financial crisis, when insolvencies reached a high of 113.1 per 10,000 companies. In contrast, the figures for July 2024 show approximately 56.6 insolvencies per 10,000 companies, or one in every 177 businesses. However, the upward trajectory since 2023 signals that economic pressures are intensifying.

Insolvency Procedure Breakdown

Creditors’ Voluntary Liquidations (CVLs)

CVLs dominate the July 2024 insolvency landscape, accounting for 77% of total cases. This suggests that many companies, particularly SMEs, are choosing to voluntarily wind down operations before creditors take legal action. The high number of CVLs highlights the growing number of businesses that have become insolvent due to unsustainable debt burdens, rising costs, and subdued demand.

Compulsory Liquidation

The significant rise in compulsory liquidations to 320 cases in July 2024 signals increased creditor enforcement. Compulsory liquidations occur when creditors, frustrated by unpaid debts, seek court orders to force a company into liquidation. This rise reflects the growing number of businesses unable to manage their debt repayments.

Administration

The 155 administrations recorded in July reflect attempts by some companies to restructure or seek rescue options. Administration is often viewed as a tool to protect viable businesses by allowing them to continue trading while restructuring debt. This trend suggests that while many businesses are in distress, some are still trying to find a path forward.

Company Voluntary Arrangements (CVAs)

CVAs accounted for 25 cases in July 2024, offering a smaller but significant route for businesses to avoid liquidation. CVAs allow businesses to reach agreements with creditors to repay their debts over time, making it a popular option for larger companies seeking to avoid more drastic insolvency measures.

Economic Factors Driving Insolvency Rates

Several economic factors have contributed to the rise in insolvency rates in 2024:

Inflation

The persistent rise in inflation has increased operating costs across all sectors, from raw materials to energy prices. These rising costs are squeezing profit margins and making it difficult for businesses to remain viable.

Interest Rates

The Bank of England’s successive interest rate hikes have made borrowing more expensive, putting additional pressure on businesses that rely on debt financing. Rising interest rates have also affected consumer spending, further reducing demand for businesses in key sectors like retail and hospitality.

End of Government Support Schemes

The end of government support measures has left many businesses, particularly SMEs, without the financial safety nets that kept them afloat during the pandemic. Without access to grants or furlough schemes, many companies are now facing insolvency.

As of October 2024, the United Kingdom’s corporate insolvency landscape has exhibited notable shifts compared to the same period in 2023. Analyzing year-to-date data reveals both encouraging declines and areas of concern across various sectors.

Year-to-Date Corporate Insolvency Figures

Between January and October 2024, England and Wales recorded a total of 17,450 company insolvencies. This marks a 15% decrease from the 20,500 insolvencies reported during the same period in 2023. The monthly breakdown indicates a consistent downward trend, with October 2024 reporting 1,747 insolvencies—a 24% reduction from October 2023.

Comparative Analysis with 2023

The decline in insolvencies is evident across various insolvency types:

• Creditors’ Voluntary Liquidations (CVLs): CVLs, which constitute the majority of insolvencies, decreased by 24% in October 2024 compared to October 2023.

  GOV.UK

• Compulsory Liquidations: These fell by 20% in the same period, indicating fewer court-ordered company closures.

  GOV.UK

• Administrations: There was a 28% reduction, suggesting improved financial stability among companies.

  GOV.UK

Sector-Specific Trends

While the overall decline is positive, certain sectors continue to face challenges:

• Construction: This sector remains vulnerable due to rising material costs and labor shortages, leading to higher insolvency rates.

• Hospitality and Retail: Despite a general decline, these sectors still experience elevated insolvency levels, attributed to changing consumer behaviors and increased operational costs.

Economic Factors Influencing Trends

Several economic elements have contributed to the observed insolvency trends:

• Inflation: The Consumer Price Index (CPI) inflation rate decreased to 1.7% in September 2024, down from 2.2% in August. This reduction has alleviated some cost pressures on businesses.

  Vertex Resourcing

• Unemployment Rates: The unemployment rate rose to 4.3% between July and September 2024, up from 4% in the previous quarter. While this indicates a slight labor market softening, it remains relatively low, supporting consumer spending.

  The Times

• Regulatory Changes: Recent increases in employer National Insurance Contributions and the National Living Wage have raised operational costs for businesses, particularly affecting labor-intensive sectors.

  The Times

Conclusion

The year-to-date analysis of UK corporate insolvencies up to October 2024 presents a cautiously optimistic outlook, with a significant reduction in insolvencies compared to 2023. However, ongoing economic challenges and sector-specific vulnerabilities necessitate continued vigilance from businesses and policymakers to sustain this positive trajectory.