Year-on-year jump in company insolvencies in January

This increase to 1,769 insolvencies was higher than levels seen while the government support measures were in place in response to the Covid-19 pandemic and higher than pre-pandemic numbers. This overall figure consisted of 1,294 creditors’ voluntary liquidations (CVLs), 339 compulsory liquidations, 120 administrations and 16 company voluntary arrangements (CVAs).  

Of these, compulsory liquidation and administration numbers were higher, however CVLs were lower than was seen in January 2023.  

In addition to this, month-on-month corporate insolvencies have dropped by 11.8% from December’s 2,005 figure. Reflecting on the figures, R3’s president Nicky Fisher said: “January was the sting in the tail of a hard year for businesses.  

“The post-Christmas boost many were hoping for didn’t happen as people remained conscious of the costs of food, fuel and energy, and held back on spending on anything that wasn’t essential, while running costs for businesses remained high and margins remained thin. 

“As a result, many firms who were struggling missed out on the lifeline or windfall they were hoping for from the Christmas trading period, and if the business climate doesn’t improve and the recession takes root, we may see corporate insolvency numbers increase further in future.” 

Kroll managing director Matt Ingram, meanwhile, said: “The first set of insolvency statistics for 2024 continue with the trends we saw throughout last year. Liquidations remain high, we expect to see these numbers tail off later in the year but in the short term, with consumer spending still suppressed, we will likely see smaller businesses use this process to wind up their affairs.” 

Individual insolvencies, meanwhile, rose by four percent year-on-year in England and Wales going up to 8,089 cases. These consisted of 4,528 individual voluntary arrangements (IVAs), 2,793 debt relief orders (DROs) and 768 bankruptcies.

The overall increase was driven by a 60% jump in the number of DROs and a 20% rise in bankruptcies, while the number of IVAs was 16% lower. There was also a 22.8% in personal insolvencies month-on-month from the 6,585 figure seen in December 2023.  

Responding to this, Fisher said: “This suggests that there is a short-term increase in demand for all kinds of personal insolvency support, and that more people are looking for support with higher levels of personal debt than last year, due to the increase in DRO and Bankruptcy levels compared to January 2023’s figures. 

“Breathing Space numbers also soared to the highest levels since the process was introduced in May 2021, which potentially indicates an increased need for a break from creditor pressure following the festive period, but what this means for personal insolvency levels in the short and long-term remains to be seen. 

“We know January is traditionally a tough month for consumers – and this was no exception. Christmas came at the end of a year of increased expenses, and the outgoings associated with it may have been the tipping point for those who had been scraping by until then. 

“Food, fuel, housing and energy costs remain high – as they have for a long time now – and remain key concerns for many households. If costs continue to rise, and this isn’t matched by an increase in wages, we could see personal insolvency numbers rise over the course of this year.” 

In Scotland, company insolvencies decreased by 19% year-on-year – dropping to 88 in January 2024. This was comprised of 46 CVLs, 34 compulsory liquidations, seven administrations and one CVA.  

In contrast to this, there was a 114% increase in company insolvencies in Northern Ireland – going up to 30. This was comprised of 17 CVLs, eight compulsory liquidations, four CVAs and one administration.

Meanwhile, there was a year-on-year drop of seven percent in individual insolvencies – going down to 112. This consisted of 76 IVAs, 20 bankruptcies and 16 DROs.