Company insolvencies drop month-on-month in July

This is, however, still 16% higher than the 1,890-figure seen in same month in 2023 – while the number of company insolvencies remained much higher than those seen both during the Covid pandemic and between 2014 and 2019.  

Of the drivers of the overall figure, 320 were made up of compulsory liquidations – the highest seen before the pandemic.  

As has been the case for a number of months now, the highest contributor to the overall figure came from the creditors’ voluntary liquidations (CVLs), consisting of 1,691, while 155 administrations and 25 company voluntary arrangements (CVAs) also took place. All types of company insolvency were higher than in July 2023.

Over the last 12 months, one in 177 companies – at a rate of 56.6 per 10,000 companies – entered insolvency, up from the 54.7 per 10,000 seen in the 12 months ending 31 July 2023. 

However, while the insolvency rate has increased since the lows of 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession. 

Reflecting on these figures, R3 president Tim Cooper said: “The rise in administration numbers compared to last year is potentially positive for business rescue prospects and highlights the importance of early advice for exploring rescue plans, while the increase in Compulsory Liquidation figures shows the ongoing financial pressures creditors are facing. 

“Recent improvements in market and economic conditions, driven mainly by a successful summer of sport and more stability for businesses following the General Election, have led to better trading conditions for retail, hospitality, and construction businesses.  

“The construction sector is expected to receive a further boost through the government’s planned housing and infrastructure initiatives, although it will take time for them to have an impact.  

“The improved economic and business climate should also result in greater acceptance and success of rescue proposals, and businesses of various sizes are showing a growing interest in restructuring plans, which is positive news for the profession.” 

Kroll’s head of global restructuring Sarah Rayment, meanwhile, said the figures paint a “relatively calm picture”. She added: “Certainly, compared to recent years, looking at the big picture, there are reasons to be cheerful.  

“We are keeping a watchful eye on inflation, but broadly there is growth, as well as confidence and economists expect more cuts to the base rate over the next few months. There is therefore more natural activity with businesses looking to expand and acquire.  

“However, green shoots do not immediately translate into good news for all companies. Borrowing costs are still high and many companies are looking to refinance in the coming months.  

“The question is whether they will have enough financial headroom with higher borrowing costs or whether their lenders will give them enough leeway. It is perhaps more likely that we will see more restructuring activity.” 

Individual insolvencies in England and Wales, meanwhile, remained roughly unchanged between June and July 2024 – hitting 10,524 in July – but is 24% higher than in July 2023.  

These individual insolvencies consisted of 5,727 individual voluntary arrangements (IVAs), 4,163 debt relief orders (DROs) and 634 bankruptcies. The last four months have all seen the highest monthly numbers of DROs since their introduction.  

As for the number of IVAs registered, this remained similar to June 2024 and is 12% higher than in July 2023. However, bankruptcy numbers remained at about half of pre-2020 – although they are at similar levels to those seen in the past 12 months.  

Meanwhile, in the 12 months ending 31 July 2024, one in 442 adults in England and Wales entered insolvency – at a rate of 22.6 per 10,000 adults. This is lower than the rate of 23.3 per 10,000 adults seen over the same period to 31 July 2023.  

Additionally, there were 7,369 Breathing Space registrations in July 2024 – five percent lower than in July 2023.

Commenting on the breathing space figures, Cooper said this “highlights the ongoing debt challenges individuals in England are facing when you consider them alongside the slight fall in personal insolvencies we’ve seen month-on-month, as the combined figure for both processes are higher than they were in June of this year. 

“The cost of living remains a concern, but consumers are cautiously optimistic, and are spending more on experiences while at the same time remaining wary of making major purchases.” 

Turning to Scotland, 117 company insolvencies were registered in the country in July 2024 – 21% higher than during the same month in 2023. These comprised 76 CVLs, 33 compulsory liquidations and eight administrations.  

In Northern Ireland, 20 company insolvencies were registered – 54% higher than in July 2023 – with the total number being comprised of 10 CVLs, five compulsory liquidations, four administrations and one CVA.  

As for individual insolvencies, this comprised a total of 152 – 41% higher than in July 2023 – made up of 104 IVAs, 25 bankruptcies and 23 DROs.