Market Data

UK corporate insolvencies see slight decline in 2024

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The UK saw a modest decline in corporate insolvencies in 2024, offering a glimmer of hope for businesses grappling with ongoing economic pressures. Official figures from the Insolvency Service revealed 23,872 registered company insolvencies during the year—a 5% drop from the 25,163 cases recorded in 2023, which marked the highest annual total since 1993.

Key corporate insolvency figures are:

  • Total Insolvencies: 23,872 (down 5.1% from 2023)
  • Creditors’ voluntary liquidations (CVLs): 18,840 (down 8% from 2023)
  • Compulsory liquidations: 3,230 (up 14%, highest since 2014)
  • Administrations: 1,597 (up 2%)
  • Company voluntary arrangements (CVAs): 202 (up 9%)
  • Receivership appointments: 3

Despite the decline, insolvency levels remain significantly higher than pre-pandemic averages, reflecting a tough environment for businesses. CVLs, though reduced from 2023’s record highs, continued to dominate insolvency cases, while compulsory liquidations surged, signalling growing impatience among creditors, including HMRC.

Industry insights

Theo Chatha, Chief Financial Officer at Bibby Financial Services, highlighted the sustained pressures on small businesses.

“While insolvency rates dipped slightly in 2024, the numbers remain alarmingly high compared to the previous decade,” he said. Chatha warned of a “vicious cycle” in supply chains, with unpaid invoices and bad debt undermining business stability.

Helen Martin, an insolvency expert at Stevens & Bolton, struck a cautiously optimistic note. “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.”

Martin pointed to construction, hospitality, and retail as the sectors most vulnerable to additional cost pressures, including increases in the minimum wage and national insurance contributions from April 2025.

Tim Cooper, President of R3, the UK insolvency trade body, and a Partner at Addleshaw Goddard LLP, added context to the figures.

“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.”

He emphasised that while CVLs have fallen, they remain elevated compared to pre-pandemic levels, as directors continue to proactively liquidate businesses under their control.

Sectoral challenges and future risks

The construction, retail, and hospitality sectors bore the brunt of insolvencies in 2024. Rising costs, cautious consumer spending, and adverse weather all played a role. The introduction of higher employer costs in April is expected to further strain these industries in 2025.

On a more positive note, restructuring plans emerged as a significant development in 2024, with the Tasty plc ruling in May opening this process to mid-market firms. Cooper expressed hope that restructuring plans could become more accessible to SMEs: “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.”