UK corporate insolvencies drop 8.9% in August

Corporate insolvencies in the UK decreased by 8.9% in August 2024 from the previous month, according to the latest data from the Insolvency Service.

The total number of corporate insolvencies stood at 1,953 compared to July’s total of 2,144, and decreased by 14.6% compared to August 2023’s figure of 2,286.

The current figure also indiates that corporate insolvencies increased by 2.8% compared to August 2022, which saw 1,900 insolvenices.

Personal insolvencies decreased by 5.1% in August 2024 to a total of 10,000 compared to July’s total of 10,536, and increased by 15.6% compared to August 2023’s figure of 8,652.

The number of personal insolvencies has grown by 4.5% from August 2022’s figure of 9,569.

Tim Cooper, President of R3, the UK’s insolvency and restructuring trade body and a partner at Addleshaw Goddard LLP commented on August’s insolvency figures:

“The monthly fall in corporate insolvency figures is likely to be a result of the traditional slowdown in appointments we see during August and shouldn’t distract from the fact that businesses are still struggling and many are still trying to manage high levels of debt at a time when trading conditions remain difficult.

“While the overall economic picture has improved, the market remains a challenging one, and managing costs is still very much a key concern for many directors. From a sectoral perspective, retail sales increased in the summer and construction output increased in July, but it remains to be seen whether this is enough to compensate for months of challenging trading conditions and whether the critical pre-Christmas trading period can provide the boost companies right across the economy badly need.

“Looking more broadly, now the Bank of England’s Monetary Policy Committee has made its decision on the rate of interest, firms may be prepared to look at their financing arrangements as many are likely to have been delaying this decision until after the announcement. However, there may be limited options available, and this could lead to more discussions around restructuring options for businesses seeking alternatives to a fresh injection of funds.

“Of these, Restructuring Plans remain an option sought by a range of businesses across the UK, and the profession is continuing to search for a means of making them accessible to SMEs. Some of the most recent case law would suggest progress is being made, which is positive news given current levels of corporate insolvency and the challenges faced by the business community.”