Year-on-year jump in insolvencies seen in February

This consisted of 1,707 creditors’ voluntary liquidations (CVLs), 217 compulsory liquidations, 166 administrations and 12 company voluntary arrangements (CVAs) – with the number of compulsory liquidations, CVLs and administrations all being higher than they were in February 2023.  

The overall figure is also 18.5% higher than January’s total of 1,774. Alongside this, corporate insolvencies were up 38.5% from February 2022’s 1,518 figure, and 73.3% more than is pre-pandemic level of 1,213 recorded during the same month in 2019.  

Responding to the figures, R3 president Nicky Fisher said: “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.” 

ReSolve managing partner Mark Supperstone added: “Whilst February’s figures show a significant 17% increase from the same time last year, as well as being up from January and December, they are still lower than the peaks we saw last year. It’s clear that things are still very much in flux. 

“Others are predicting a tsunami of insolvencies, but I don’t think this will be the case. I expect insolvencies will stay inflated, above average levels, until the first quarter of 2025 when they might start to drop back down again. 

“A reduction in interest rates and lower inflation at some point this year is a good sign but there is still a lag of about 18 months before this would impact businesses financially.” 

There was also a significant 23% year-on-year jump in individual insolvencies in England and Wales – consisting of 709 bankruptcies, 3,007 debt relief orders (DROs) and 6,420 individual voluntary arrangements (IVAs).  

The higher number was primarily driven by a 44% increase in the number of DROs, and 16% increases in both bankruptcies and IVAs. These numbers include a usually higher number of IVAs that were approved more than two months earlier but were not registered until last month.  

There were also jumps of three percent and 22.4% when compared to the figures seen during the same period in 2022 and 2019. Fisher suggests the figures highlight the cost of living remains a major concern and challenge.  

They went on to explain: “High energy costs are at the front of most people’s minds, and while food inflation is falling, prices are still higher than they were a year ago. People are looking to save money wherever they can, and are reluctant to make major purchases. 

“The government’s decision to remove the fee for entering a DRO and increase the debt threshold for this process to £50,000 is likely to mean an increase in the number of people entering a DRO and a fall in the amount of people entering other processes.” 

Money Advice Trust’s David Cheadle added: “These figures highlight the impact that sustained high costs have had for many people, as the number of people accessing debt options has risen.” 

Scotland, meanwhile, saw 94 company insolvencies registered in February – nine percent higher than during the same period in 2023. This was comprised of CVLs 58, 33 compulsory liquidations and three administrations.  

As for Northern Ireland, it saw more than twice company insolvencies registered last month year-on-year – going up to 26. This was made up of 14 compulsory liquidations, nine CVLs and three administrations.

 
Alongside this, there was a 13% jump in individual insolvencies year-on-year last month – going up to 122. This consisted of 90 IVAs, 21 bankruptcies and 11 DROs.