UK corporate insolvencies drop 10% in October 2024

Corporate insolvencies in the UK fell by 10% in October 2024 from the previous month, according to the latest data from the Insolvency Service.

The total number of corporate insolvencies stood at 1,747 compared to September’s total of 1,950 and was 24% lower than October 2023’s figure of 2,293. 

Company insolvencies in October 2024 consisted of 188 compulsory liquidations, 1,445 creditors’ voluntary liquidations (CVLs), 100 administrations and 12 company voluntary arrangements (CVAs). All types of company insolvency – apart from receivership appointments, which are now rare – were lower than in September 2024.

Personal insolvencies decreased by 14% in October 2024 to a total of 8,952 compared to September’s total of 10,651. The October 2024 figure was 2% lower than in October 2023. 

“The month-on-month and year-on-year fall in corporate insolvency numbers is the result of a decrease in all corporate insolvency processes, with the exception of Receiverships. On the face of it, this may seem surprising, as concerns about potential tax changes in the Budget drove high numbers of Members’ Voluntary Liquidation in September and October as directors of solvent companies chose to wind down their businesses before any changes were announced and this may have skewed this month’s figures. 

“We have also seen a more positive trading climate recently as interest rates and inflation have fallen and retail, hospitality and construction have seen an improvement in spending, sales or output. Directors of firms in these sectors will be hoping this continues after a largely challenging year, while retail and hospitality bosses will be hoping that this year’s Golden Quarter is a successful one, and retailers will hope this year’s Black Friday sales jump-start pre-Christmas consumer spending.

“The big question for many businesses is how the change to employer National Insurance Contributions that was announced in the Budget will affect them.Although this will increase costs for all but the smallest businesses, the feedback from the market is that some directors and management teams will look to manage this by managing their staff levels or raising their prices, and firms have time to work out how they will manage the increases in costs this policy will bring before it takes effect in April so the jury is still out on how this will affect levels of corporate insolvency.

“Directors will need to review all their costs and carefully think about how this additional expense can be absorbed. Given the potential impact this could have on their bottom lines, I would urge them to consider seeking advice from a qualified source about how they can best manage this so any potential issues can be identified and addressed as early as possible.

“The profession is also continuing to see an increased demand for, and a growing use of, Restructuring Plans, with a number of big-name consumer-facing businesses turning to this process in recent weeks to help improve their financial position and keep their businesses and supply chains functioning. We still need to find a means of making Restructuring Plans accessible to smaller firms, but the profession is working towards this as we know SMEs are keen to use them where appropriate.”