Business Insolvencies rise slightly

Latest figures from the Insolvency Service have shown that the number of registered business insolvencies in England and Wales increased by 1.4% in July when compared to the month before.

The number of registered business insolvencies in England and Wales was 2,081 in July 2025, similar to both June 2025 (2,053) and the same month in the previous year (2,078 in July 2024). 

The business insolvencies in July 2025 consisted of 339 compulsory liquidations, 1,583 creditors’ voluntary liquidations (CVLs), 147 administrations and 12 company voluntary arrangements (CVAs). There were no receivership appointments.

In July 2025, CVLs accounted for 76% of all company insolvencies. The number of CVLs was similar to June 2025, but 2% lower than the same month last year (July 2024). The average monthly number of CVLs so far in 2025 is at a similar level to the 2024 monthly average.

The number of CVAs in July 2025 was 20% lower than in June 2025 and 52% lower than in July 2024. Numbers remain low compared to historical levels. CVAs are not seasonally adjusted due to low volumes.

The number of compulsory liquidations in July 2025 was slightly higher than in June 2025, 11% higher than in July 2024 and 26% higher than the 2024 monthly average.

The number of administrations in July 2025 was 24% higher than in June 2025 and 5% higher than in July 2024. However, the average monthly number of administrations so far in 2025 is slightly lower than the 2024 monthly average.

There were no receivership appointments in July 2025. Receivership appointments are now rare, with only four being registered in the past 12 months ending July 2025

Tom Russell, President of R3, the UK’s restructuring, turnaround and insolvency trade body, and a Licensed Insolvency Practitioner and Director at James Cowper Kreston, said  “Corporate insolvencies remained broadly stable last month, with the trends showing a rise in Compulsory Liquidations and a slight uptick in Administrations, while Creditors’ Voluntary Liquidations and Company Voluntary Arrangements fell. This pattern may suggest that fewer directors are choosing to close their companies voluntarily, whether because they are seeing improvements in trading conditions or are caught in a holding pattern, waiting to see where the economy may head next.

“Compulsory Liquidations were higher this July than compared to one and two years ago. Our members are reporting that HMRC is taking a more assertive stance towards enforcement, with greater appetite to recover unpaid taxes through the courts. Directors are feeling the impact of this firmer enforcement, which is adding pressure on businesses already navigating a challenging market.

“While corporate insolvency figures have remained relatively stable, the broader economic picture shows tentative signs of recovery. Following a weak April and May, when some spending may have been brought forward in anticipation of higher prices, economic activity picked up in June, helping Q2 GDP to grow by 0.3%. While this represents only modest growth, it is encouraging to see the economy moving forward rather than stalling. Coupled with the recent cut to interest rates, the outlook for businesses appears slightly more positive, though it is too soon to gauge the full effect, and above target inflation remains a concern.

“However, a sense of caution remains widespread across the UK. Many firms are sitting at a crossroads, delaying major decisions until they see which way the economy moves. Our members report a consistent picture: directors are taking stock of their position and seeking professional advice, often as part of contingency planning should expected investment does not materialise, or to ensure boards are clear on their options and responsibilities should insolvency become a risk. They are assessing whether trading conditions are likely to improve and, in many cases, whether the cost-saving measures they may have already taken will be enough to keep their struggling business afloat.

“Challenges remain for both retail and hospitality, where higher costs, changing consumer habits, and uneven demand continue to make trading conditions difficult. Within retail, the difficulties appear concentrated among individual retailers rather than the sector as a whole, with some larger high-street brands being outpriced and outperformed by cheaper online, alternatives as shoppers seek the best value.

“Construction remains one of the sectors most affected by insolvencies. While it is encouraging to see output rising, many businesses are still facing challenges. Supply chain pressures, skills shortages, and changes in the housing market mean the environment for construction firms continues to be complex and unpredictable, even as overall activity shows some improvement.”

Colin Haig, Restructuring Partner at Azets, said “Costs and cash pressures continue to drive corporate insolvencies. Businesses have faced rising expenses for a number of years, and this has been driven by a mixture of economic and geopolitical issues. This, alongside ongoing problems with managing Covid debts, has led to an increasing number of directors entering an insolvency process in an attempt to resolve their finances and pay their creditors.

“While the monthly and yearly increases in corporate insolvencies are small, the figures for July 2025 remain well above pre-pandemic levels and are the highest we’ve seen for the month of July in more than five years. Having said that, the monthly and yearly increase shown in the figures published today is largely driven by a rise in the number of firms entering an Administration, which is potentially positive news as it suggests that there are more businesses facing the prospect of a sale out of Administration – the outcome the profession will always seek to achieve wherever possible.

“Looking at the figures more broadly, Liquidations continue to make up the overwhelming majority of insolvency processes as directors find themselves facing no other alternative to closing their businesses and creditors resort to the courts as a result of a need to keep their own finances on track and settle their own debts, with HMRC remaining the largest instigator of winding-up petitions as it attempts to recapture money for the Treasury.

“From what we’re seeing in the marketplace, small businesses remain relatively resilient. Their size makes them able to identify and respond to issues with reasonable speed – largely because their directors are very involved and very aware of every aspect of their businesses, and quick to spot signs it could be in trouble. However, any tax changes have real potential to affect them, their customer base and the economy and we urge the Chancellor to think carefully before introducing anything at the Budget in October that might have unintended consequences for firms and consumers.

“There remain a number of options open to distressed firms to address their financial issues – but the sooner they seek advice about their situation, the greater chance they have of the full range of solutions and processes being open to them, and of turning their situation around. Talking about the problems your business has is one of the hardest things to do but speaking to an advisor when the signs of financial distress first emerge is the most sensible and most impactful action you can take – for you and for your business.”

Freddy Khalaschi, Business Recovery Partner at Menzies said “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.”

Daniel Staunton, Senior Associate in the Restructuring & Insolvency team at Kingsley Napley LLP, said “Today’s monthly insolvency statistics for July 2025 show that there were 2,081 registered company insolvencies, roughly on par with the previous month and July 2024. Figures are down from the record 30 year high in 2023 but up from the last 6 months of 2024. July 2025 saw: 339 compulsory liquidations, 1,583 CVLs, 147 administrations, 12 CVAs. CVLs were roughly the same as last month but administrations were slightly up.

“The stats this month are much ado about nothing: no surprises and consistent with the figures published throughout 2025 with no sharp peaks and troughs. I expect that to continue into August and September 2025 absent significant external factors or government policy shifts. Inflation has crept up but the Bank of England acted quickly again to cut interest rates so the total insolvency figures are likely to remain stable. It comes as no surprise that the worst hit sectors continue to be construction, retail and food and beverage companies which trend I expect to continue.”

Nick O’Reilly, Restructuring Director at MHA, said “Total company insolvencies in the UK rose slightly in July (by just over 1%), as businesses continue to navigate a difficult economic environment.

“The retail and hospitality sectors are having a particularly difficult time, with Claire’s Accessories the latest to fall victim to a the wider high street malaise appointing administrators in the UK and Ireland and seeking Chapter 11 protection in the US, putting more than 2,000 jobs and hundreds of stores at risk.
Increased employer National Insurance contributions and a rise in the national minimum wage have led to higher staff costs, and the retail, hospitality, and leisure sector has had its 75% discount on business rates cut to 40%. With these changes taking effect from April, we are now seeing the significant impact this is having on the retail and hospitality sectors.

“Yet, for many of these struggling companies increased business costs were the straw that broke the camel’s back, rather than a catalyst for previously flourishing businesses to go under. Claire’s, for example, has been under intense financial pressure for several years. In 2018, it made the decision to cut its number of European stores and went into administration in the US. While these increased post April costs are far from welcomed by UK businesses, but it is too easy to blame the sectors woes entirely on the Government’s actions. Look also to falling sales, high inflation and growing competition from online rivals.

“In truth business confidence in the UK is lower than it should be. The construction sector is a good example of this. While confidence in the sector is lacking, as the especially low construction PMI for July showcases, and the sector’s small profit margins make businesses particularly vulnerable to insolvency we are not yet seeing this reflected in total insolvencies. While increased costs, global trade tensions, and uncertainty ahead of the Autumn Budget mean that this is not an ideal environment for businesses, there is also evidence that business owners have convinced themselves that the situation is more dire than it is.”

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.”