Annual figures from the Insolvency Service have shown that there were 23,872 registered company insolvencies in England and Wales in 2024 a fall of 5.1% from 2023’s figure of 25,163.
The company insolvencies comprised of 18,840 creditors’ voluntary liquidations (CVLs), 3,230 compulsory liquidations, 1,597 administrations, 202 company voluntary arrangements (CVAs) and three receivership appointments.
The slight decrease in the total number of company insolvencies in 2024 was driven by an 8% decrease in the number of CVLs compared to 2023, which saw the highest ever annual total in the time series since records began in 1960. However, compulsory liquidations were at their highest levels since 2014 with the 2024 annual number being 14% higher than 2023. Administrations in 2024 were also slightly higher than in 2023 (up 2%) and the annual number of CVAs increased by 9% over the same period. CVA numbers remained below levels seen before the Covid-19 pandemic.
In 2024, CVLs were the most common company insolvencies procedure (79%), followed by compulsory liquidations (14%), administrations (7%) and CVAs (less than 1% of cases). There were also three receivership appointments in 2024, one more than in 2023. While compulsory liquidations accounted for a greater proportion of insolvencies in 2024 compared to 2023, the proportion was lower than five years ago due to an increase in CVL numbers over this period. In 2019, CVLs made up only 70% of cases, whereas compulsory liquidations, administrations and CVAs accounted for 17%, 11% and 2%, respectively.
In 2024, compulsory liquidations were at the highest levels since 2014, having increased by 14% compared to 2023 volumes. This continued an increase from record low levels seen in 2020 and 2021, while restrictions applied to the use of statutory demands and certain winding-up petitions (leading to compulsory liquidations).
In 2024, the number of administrations increased by 2% from 2023 and was slightly higher than annual totals seen between 2015 and 2019. The number of administrations has continued to increase since 2022 from an 18-year annual low seen during the covid pandemic in 2021.
Separately, December 2024 figures showed that there were 1,838 business insolvencies, 6% lower than in November 2024 (1,962) and 14% lower than the same month in the previous year (2,139 in December 2023).
The business insolvencies in December 2024 consisted of 273 compulsory liquidations, 1,421 CVLs, 127 administrations and 17 CVAs. Compulsory liquidations and CVA numbers were higher than in November 2024, but CVLs and administrations were lower.
The seasonally adjusted number of compulsory liquidations in December 2024 was 4% higher than in November 2024 and 53% higher than in December 2023.
The number of administrations in December 2024 was 5% lower than in November 2024 and 5% higher than in December 2023 after seasonal adjustment
The number of CVAs was 13% higher in December 2024 than in December 2023 and 21% higher than in November 2024. CVAs are not seasonally adjusted due to low volumes.
Commenting on the figures Tim Cooper, President of R3, the UK’s insolvency and restructuring trade body, and a Partner at Addleshaw Goddard LLP said “Despite a year-on-year decline in corporate insolvency numbers, the figures for this year are still higher than in 2022 and well above pre-pandemic levels. Compulsory liquidation levels have increased compared to last year as creditors pursue the debts they are owed in an effort to balance their own books, and while Creditors’ Voluntary Liquidation numbers have declined compared to 2023, they are higher than in 2022 and the years before and during the pandemic as a high volume of directors close their businesses now while the decision to do so still rests in their hands.
“2024’s insolvencies have been driven by another year of high costs and a series of political, economic and geopolitical events which have taken a toll on businesses in England and Wales. Members have told us that the Election, the Budget and the conflict in the Middle East have all led to increases in enquiries and requests for advice and support, and this reflects how these unexpected shocks can be and have been the tipping point for many businesses after years of battling harsh trading conditions.
“From a sectoral perspective, retail, hospitality and construction have all suffered this year. All three of these industries have been hit hard by continued rises in expenses, while retail and hospitality have been affected by cautious consumer spending over the past 12 months, and construction by bad weather and the delay to project starts and commissions caused by the General Election.
“These sectors are going to be some of the most affected by the Chancellor’s planned increases in Minimum Wage, Living Wage and Employers’ National Insurance Contributions. Although it’s likely we won’t see the impact of these on corporate insolvency figures until the end of the first or possibly the middle of the second quarter of next year, the prospect of their introduction is already causing concern for businesses right across the economy.
“Restructuring Plans have been a major and consistent topic of conversation in the profession this year. The Tasty plc ruling in May opened up this process to mid-market firms, and since it was made we’ve seen a number of recognisable names enter one in an attempt to resolve their financial issues. The challenge the profession faces is making Restructuring Plans accessible to the SME market – and given the positive impact this could have on local communities and supply chains by keeping viable SMEs open, I hope it can be achieved this year.
Giuseppe Parla, Business Recovery Director at Menzies, said “2024 was a year of financial uncertainty, with two separate Governments searching for the golden ticket to achieve economic growth. The result however was reduced business confidence, a high bank base rate and an enhanced tax burden for businesses. While the December statistics paint a picture of economic stability, they will likely buck the trend. The New Year is likely to bring in more of the same, with an increased cost of hiring and retaining staff, following the changes to employers NIC contributions leading many into financial difficulty. Similarly, for businesses looking to cover costs through an exit, increases to business asset disposal relief (BADR) and capital gains tax (CGT) hikes will mean reduced asset values and higher tax liabilities – meaning lower returns and less disposable funds.
“But where there is uncertainty, or a lack of stability in the economy, this provides companies with strong foundations an opportunity to grow, as those with shorter foresight begin to fall. As ever, our message would be for businesses to act early if they anticipate financial trouble. Doing so ensures that more options are available for you to secure a profitable future and remain trading.”
Stephen Goderski, Partner at restructuring and insolvency firm PKF Littlejohn Advisory said “A reduction in insolvencies is encouraging, but the real challenge is what lies ahead. With national insurance contributions set to rise in April, businesses will see their payroll costs increase, putting further strain on cash flow at a time when many are already stretched. The question is whether the government’s economic strategy will provide the stability and support businesses and SMEs need or whether uncertainty will continue to dominate the landscape.
“Larger businesses and SMEs remain vulnerable in this environment. Although some relief is coming, businesses are still waiting for clear signs of sustainable growth and improved trading conditions. If uncertainty lingers, there is still a risk that insolvencies could rise again in the months ahead.
“Proactive measures, such as seeking professional advice and reassessing financial strategies early and often can significantly enhance the chances of long-term viability. For small and medium-sized enterprises (SMEs), this approach is vital to ensure their role as the backbone of the UK economy remains strong.”
Theo Chatha, Chief Financial Officer, Bibby Financial Services said “While insolvency rates dipped slightly in 2024, the numbers remain alarmingly high compared to the previous decade, underscoring continued challenges for small businesses across the UK going into 2025.
“Insolvencies don’t happen in isolation – they can trigger a vicious cycle in supply chains, with unpaid invoices causing bad debt and strained cashflow. Our Q3 2024 SME Confidence Tracker found that 58% of SMEs surveyed had at least one supplier go bust, and almost two-thirds experienced customers ceasing to trade last year.
“Yet bad debt is a hidden assassin which is often overlooked, slipping under the radar of many SMEs. Throughout 2025, businesses should take proactive steps to protect themselves: assessing exposure to unpaid invoices, recovering outstanding payments swiftly, and strengthening supply chains to mitigate potential risks.”
Helen Martin, Insolvency Expert at Stevens & Bolton said “On first blush, today’s statistics provides a cautiously optimistic picture, with overall insolvencies down 5% on 2023 demonstrating that the country is finally getting over its Covid hangover. But set against lower than expected growth in November and news today that UK employers cut staff numbers through the last quarter of 2024, businesses are not entering 2025 without challenges.
“We will have to wait to see if the downward trend continues in 2025, given the increased costs imposed on businesses by the budget, and also the unpredictable and potentially disruptive effect of the Trump presidency. With many of the costs to employers only taking effect in April, the impact on insolvency rates may come later in the year.”
“A spike in compulsory liquidations, where it is a creditor which has taken the step of commencing the insolvency proceeding, indicates that creditor patience is being exhausted – creditors, notably HMRC, are increasingly unwilling to extend grace periods for businesses which are still struggling.”
“Construction, hospitality and retail continue to be the hardest hit sectors. We can expect the increase in minimum wage and national insurance contributions from April to significantly impact these sectors, increasing pressure on profit margins. The trend of high insolvency rates is likely to continue, or even intensify, in these sectors in the coming months. However, the broader economic picture of interest rate cuts and slowing inflation may indicate a period of relatively stable insolvency rates in 2025.”