Increase in company insolvencies expected against challenging backdrop

The number of registered company insolvencies in January 2024 was 1,769 – a 5% increase from the same month last year (1,685 in January 2023) according to new figures. 

There were 339 compulsory liquidations in January 2024, up 66% year-on-year. The number of creditors’ voluntary liquidations (CVLs) was 1,294, administrations were at 120 and there were 16 company voluntary arrangements (CVAs) in January 2024.

CVL numbers were down 6% on January 2023, while administration and CVA numbers increased by 40% and 14% respectively.

Gareth Harris, partner at RSM UK Restructuring Advisory, said: ‘The latest monthly insolvency statistics, whilst disappointing, do not come as any surprise against the backdrop of a confirmed recession and continuing high interest rates. Whilst the technical recession may have lasted six months, the last two years have in fact been very hard for many small and medium sized businesses, with low growth, supply chain issues and high inflation leading to insolvency levels over that period about 38% above long-term averages.

‘What is clear is that the legacy of Covid is not behind us, as flat growth, high interest rates and leveraged balance sheets start to impact larger businesses. However, there are some glimmers of hope, as we continue to see appetite in the market from investors and lenders to provide lifelines, and we are still able to drive solutions quickly with assistance from key stakeholders. In addition, some of the underlying economic trends, such as employment levels and real income levels are rising.’