Business insolvencies increase by 7.4%

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England and Wales increased by 7.4% in February 2026 when compared to the previous month.

The data showed that there were 1,878 business insolvencies. The figures was  7% lower than the same month in the previous year (2,015 in February 2025).

The business insolvencies consisted of 249 compulsory liquidations, 1,473 creditors’ voluntary liquidations (CVLs), 146 administrations and 10 company voluntary arrangements (CVAs). There were no receivership appointments.

CVLs accounted for 78% of all business insolvencies. The number of CVLs increased by 11% from January 2026, but was 3% lower compared to the same month last year (February 2025).

The number of compulsory liquidations was 2% lower than in January 2026 and 35% lower than in February 2025.  The number of administrations in February 2026 was 4% lower than in January 2026, 30% higher than in February 2025, and 17% higher than the 2025 monthly average.

The number of CVAs in February 2026 was 23% lower than in January 2026 but 43% higher than in February 2025. Numbers remain low compared to historical levels. CVAs are not seasonally adjusted due to low volumes.

There were no receivership appointments in February 2026.

Commenting on the data, Tom Russell, R3 President, said “Corporate insolvencies increased by 7% in February, compared to the previous month, rising to 1,878 cases, although they were 7% lower than the same month in 2025.  These consisted of 249 compulsory liquidations, 1,473 creditors’ voluntary liquidations (CVLs), 146 administrations and 10 company voluntary arrangements (CVAs). Meanwhile, personal insolvency rates are increasing, with debt relief orders hitting a 17-year high.

“While today’s figures predate the current Middle East conflict, the rise in energy and fuel prices we are now seeing will inevitably mean a very shaky start to the quarter for many companies. Despite economic activity stalling in January, there had been some signs of stability returning to the economy, but the situation in the Middle East has delivered a fresh shock to businesses and households.

“The fallout from this geopolitical uncertainty risks hitting consumer spending, business confidence and investment decisions, and reduces the likelihood of interest rates coming down when the Bank of England makes their decision later this week.

“Sectors with high energy usage or thin margins, including hospitality such as hotels and restaurants, may be particularly exposed, and could feature more prominently in the insolvency figures as the year progresses.

“We’re already seeing business owners becoming more cautious about investment decisions, choosing to wait and see rather than commit while costs and demand remain uncertain. That hesitation, combined with rising overheads, means some businesses that were just about coping may now find themselves under renewed strain. This is likely to have a knock-on effect to insolvency rates in the coming months as higher costs make their way through to supply chains and balance sheets.”

Matthew Richards, joint Head of Restructuring and Insolvency at Azets, said “Corporate insolvencies reached a four month high in February, as the consequences of a poor Christmas trading period, ongoing creditor assertiveness, continued cost pressures, and issues accessing finance came to a head and led to more firms turning to an insolvency process to help address their financial issues and their debts to their creditors.

“While the figures for last month are lower than they were in February 2025 and February 2024, they are still well above pre-pandemic levels, and with further cost increases coming this April and geopolitical issues likely to affect inflation and put a further strain on margins, costs and consumer spending, insolvency numbers are likely to remain high – at least in the short-term.

“We know this Christmas was a disappointing one for many businesses, with inflation the real driver of increased retail sales, footfall falling as more customers turned to online shopping, and people being careful about how and where they spent their money. Coming off the back of a long period of rising costs and falling revenues for firms in the retail and hospitality sector, this has driven distress and requests for insolvency advice and support – and will continue to do so now we’re into a time when demand is lower in both industries.

“The ongoing war in Iran will have a similar ripple effect on inflation and energy costs to the one that followed the start of the Ukraine conflict and is likely to lead to inflation rising and further increases in outgoings. There won’t be a business in the country that won’t be affected by this, and it could be a cost too far for those whose finances are tight and whose customer base won’t be able to absorb increases in prices.

“From a sector perspective, haulage and travel firms are likely to feel the effects of the war first, especially those travel firms whose business is focused on selling or delivering long-haul flights, but we can expect to see more Brits choosing to holiday at home this year, which will be a bonus for hotspots and businesses across the UK.

“We are also seeing firms in the unregulated side of financial services facing difficulties and more instances of fraud in this area, and construction businesses continuing to struggle with shrinking margins and late payment.

“On a more positive note, our SME clients remain typically resilient as their size, and the hands-on position of their directors means they’re able to spot, respond and address financial issues very quickly. The Spring Statement brought little by the way of help for this kind of business though, and we need the Government to take an urgent look at how it can address the cost issues SMEs face, which are holding them and the wider economy back and contributing to levels of corporate insolvency. ”

Giuseppe Parla, Restructuring & Insolvency Director at Menzies said “While corporate insolvencies rose in February, the figures underline the ongoing strain many British businesses continue to face following a prolonged period of elevated costs and high interest rates. The data reflects conditions at the time, when there were tentative signs that inflation was moving closer to the Bank of England’s 2% target and expectations were building that interest rates could begin to fall later in the year.

“But the economic backdrop has shifted considerably since the end of the month. Escalating conflict in the Middle East has pushed global oil prices higher and raised concerns about disruption to key shipping routes such as the Strait of Hormuz. This has increased the likelihood of renewed inflationary pressure, particularly as higher energy and transport costs begin to filter through supply chains.

“Many businesses had hoped the Spring Statement might provide meaningful support, but for large parts of the business community, the measures announced offered little immediate relief.

“For companies already operating on tight margins, rising costs and uncertainty could quickly translate into further financial distress. As a result, we could see insolvency numbers continue to rise in the months ahead.”

Vernon Dennis, Head of Business Advisory at law firm Howard Kennedy, said “Today’s rise in insolvencies suggests a return to underlying trends following January’s typically ‘soft’ figures, which are distorted by timing, seasonality and behavioural factors which mitigate against creditors taking action at a year-end. What we’re seeing in the February figures is a continuation of the rising numbers of companies entering liquidation, as creditors once again show more willingness to clamp down on debtors.

“This trend is not new. Enforcement activity from HMRC has been rising since 2024, while voluntary liquidations are also increasing as boards take proactive decisions to close businesses amid market instability and weak consumer confidence. It is noteworthy that despite the rise in liquidation numbers, the February numbers are still below the average monthly totals for 2025. This below average trend may, however, be imperilled as economic growth is currently at 0% and inflationary pressures promoted by oil and gas price rises cause recessionary fears.

“Administrations, CVAs and restructuring plan numbers remain flat, largely due to the lack of meaningful rescue finance. Businesses across most sectors are facing tighter margins – particularly in hospitality – while traditional bank funding remains constrained. Although private credit has increasingly filled the gap, recent instability in that market may make lenders more cautious and limit the capital available to distressed companies.

“Hospitality remains the sector under the greatest strain, especially across F&B and hotels, where weak consumer confidence, regulatory pressures and new employer obligations are squeezing margins. Retail, while more robust than hospitality, continues to face similar challenges. Meanwhile, the construction and development sectors remain areas of concern as projects struggle to maintain momentum without access to rescue funding.

“But we can still hold out hope. Shocks from geopolitical and economic events are usually reflected in the insolvency figures several months after. So, if we see an early resolution to ongoing conflict, it may paint a very different picture of the insolvency landscape for the year ahead.”