Business insolvencies levels rise by 17%

18th March 2024

Latest figures from the Insolvency Service have shown that the number of business insolvencies in England & Wales in February 2024 totalled 2,102, this was 17% higher than in the same month in the previous year (1,801 in February 2023).

Of the 2,102 registered business insolvencies 1,707 CVLs, which is 12% higher than in February 2023. 217 were compulsory liquidations, which is 35% higher than February 2023; There were 166 administrations, which is 54% higher than February 2023. 12 were CVAs, which is the same as February 2023;.

The company insolvencies consisted of 217 compulsory liquidations, 1,707 creditors’ voluntary liquidations (CVLs), 166 administrations and 12 company voluntary arrangements (CVAs). Numbers of compulsory liquidations, CVLs, and administrations were higher than in February 2023.

Nicky Fisher, President at R3, the UK’s insolvency and restructuring trade body said “The monthly and yearly rise in corporate insolvencies is a result of a rise in both Creditors’ Voluntary Liquidations and administrations, as more directors choose to close down their businesses or are seeking specialist help in an effort to survive.

“February’s administrations numbers were the highest level we’ve seen in February in more than four years, which is a sign that more and more businesses are at a point where a sale or a liquidation may be their only option.

“Businesses are still suffering the after-effects of last year’s economic turbulence. Rising fuel, energy and funding costs and cautious consumer spending are continuing to take their toll on bottom lines and make it harder for businesses to break even.

“While there is still some optimism among firms about what the next year has in store, the economic conditions remain a key area of concern for many and unless things improve, we could see more and more firms turning to an insolvency process to help resolve their financial issues.

“Directors and management teams need to remain vigilant and take action as soon as they spot any signs the business could be financially distressed, as doing so gives them more time to take a decision, more potential options for resolving the situation, and a greater chance the business can be rescued.”

Daniel Staunton, Senior Associate at Kingsley Napley LLP, said “Today’s monthly insolvency statistics for February 2024 show that there were 2,102 registered company insolvencies, 17% higher than February 2023. Once again higher than pre-pandemic levels and an incremental increase on January 2024 figures of 1,769 (a 333% increase).

“February 2024 saw: 217 compulsory liquidations (35% higher than February 2023), 1,707 CVLs (12% higher than February 2023), 166 administrations (54% higher than February 2023), 12 CVAs (same as February 2023).

“Personal insolvency stats were similar with 709 bankruptcies (16% higher than February 2023); 594 were debtor applications (22% higher) and 115 creditor applications (9% lower). DROs were at 3,007 up 44% higher than February 2023 levels. The only good news is that overall bankruptcy numbers remain below pre-pandemic levels.

“The facts don’t lie. When you speak to other professionals operating in the restructuring and insolvency field they all report being busier which is reflected in the increased numbers. I predicted that there would be a growth in insolvencies this year but at a steady pace and the February 2024 stats confirm that when compared against January 2024. We can likely expect March 2024 stats to show another incremental increase. What is telling is the comparison against 2023 statistics – new records continue to be broken. This, I fear, will be an ongoing trend and whilst we won’t see tsunami levels the total number of insolvencies this year will ebb and flow like the tide. Today’s stats have also provided an updated breakdown on the sectors most affected last month demonstrating that construction (295 insolvencies), accommodation and food/beverage (262) and retail (248) businesses remain most hard hit. That trend seems set to continue.”