Administrations jump along with more liquidations recorded

As we enter the last couple of weeks of a challenging year for every sector, The Insolvency Service have released their latest summary of the corporate insolvency figures for last month. 

The total number of company insolvencies in England and Wales in November 2024 saw a total of 1,966 recorded. 

This was the sixth highest total in 2024 while it was 12% lower than the total from a year ago, which is an increase of 13% on last month’s total of 1,747.

Needless to say, the total is higher than any other corresponding November total from 2014-2019 and the Covid-19 era from 2020 to 2022. 

Analysis

Of the 1,966 corporate insolvencies recorded in November, the most frequently occurring processes were Creditors’ Voluntary Liquidations (CVLs) with 1,565.

This is an 8% increase on the previous month’s total although it is 15% lower than the same period from 12 months ago.

CVLs make up 79% of all the corporate insolvencies recorded in November, a reduction of 4% from last month’s ratio. CVLs have been increasing at a rate of approximately 10% a year between 2017 and 2019 before the pandemic repressed this growth. 

2023 saw the highest number of CVLs recorded in one year since records began in 1960 and it’s already looking like this year’s total will surpass it or will be the second highest amount seen. 

There were a total of 254 compulsory liquidations recorded in November. This was an increase of 37% on last month’s total – which at 188 was the lowest monthly total of 2024 and a 6% reduction on the number from November last year. 

Compulsory liquidations increased by 44% in 2023 after being temporarily restricted during the pandemic but remain slightly below their pre-pandemic levels.

HMRC continues to crack down on outstanding debts by recruiting more staff and being allocated more resources so this number should rise through the continuing use of statutory demands and winding up petitions to chase overdue corporation tax, VAT, PAYE and National Insurance Contributions (NICs). 

There were 132 administrations in October which was an increase of 36% on last month’s total and an annual increase of 12%. Administrations have recovered to their pre-pandemic levels after falling to 18-year-lows during the Covid affected years.

14 Company Voluntary Arrangements (CVAs) were recorded in November which was a monthly increase of 17% and by coincidence an annual increase of 17% also.

CVAs have increased by 68% annually in 2023 from their lowest total seen since 1993 although their levels are approximately half of pre-Covid totals.

Many directors are considering CVAs or administration procedures because of the additional options and legal protections granted to them that will enable them to reduce their debts and restructure their businesses and finances rather than go straight to a liquidation process.

There was one receivership appointment in November which is a reduction of one but is still a rare occurrence as there were only three recorded up to last month in the previous year – with two of those being registered in October 2024.

One restructuring plan was registered at Companies House last month along with two moratoriums. Since June 2020, 59 companies have obtained an insolvency moratorium to pause legal actions from creditors while they restructured and a further 35 had their restructuring plans registered at Companies House as required under the Corporate Insolvency and Governance Act 2020.

According to the rolling data from the Companies House register one in 189 companies (at a rate of 52.9 per 10,000) entered insolvency between 1 December 2023 and 30 November 2024. 

This was an increase of three from the previous rolling 12 monthly total. 

The Insolvency Service produces 12-month rolling rates calculated as a proportion of the total number of active companies which they say highlights longer term trends and is designed to “tune out” any one-off or monthly volatility – although both monthly and rolling numbers have increased.

Scotland

In Scotland last month there were 114 company insolvencies – a slight decrease on the total from last month but 5% higher than the total recorded one year ago. 

Last month’s total was 54 compulsory liquidations (down from 60); 55 CLVs (up from 50) and five administrations (no change). There were no CVAs or receivership appointments recorded. 

Between 26 June 2020 and 31 October 2024 there were two restructuring plans recorded in Scotland and no moratoriums.

Traditionally Scotland has seen more compulsory liquidations than any other kind of insolvency process but CVLs overtook them in April 2020 and have remained higher ever since.  

This shows that more Scottish directors and their accountants are taking difficult decisions early and retaining elements of control of the process rather than relying on creditors taking action and forcing the closure of companies. 

The total insolvency rate in Scotland in the 12 months up to and including November 2024 was 53.2 per 10,000 companies on the effective registers. This was down 0.9 from the preceding 12 months ending November 2023. 

Northern Ireland

In November, there were 16 company insolvencies in Northern Ireland. This was 15 fewer than last month and 47% less than in November 2023. 

The total number of company insolvencies was made up of three compulsory liquidations (down from 17); 10 CVLs (down from 12); two CVAs (up from one) and one administration (no change). There were no receivership appointments. 

There was one moratorium in Northern Ireland between 26 June 2020 and 30 November 2024 and no restructuring plans. 

The total insolvency rate in the 12 months up to and including November 2024 in Northern Ireland was 36.5 per 10,000 companies on the effective register. This was an increase of eight in the 12 months to November 2023. 

The total number of company insolvencies for the whole of the UK in November was 2,096 – a monthly increase of 202.

More firms are looking to restructure ahead of the New Year

Tim Cooper, President of R3, the insolvency and restructuring trade body said: “The monthly rise in corporate insolvencies is due to an increase in all forms of corporate insolvency process, with the most notable increases coming in CVLs and compulsory liquidations. 

“Compared to this time last year, corporate insolvency numbers have fallen and this is due to a reduction in CVLs and compulsory liquidations, while administration numbers were higher last month than in November 2023. 

“Fallout from the Budget and ongoing cost issues have driven corporate insolvencies this month. After years of rising outgoings and falling margins, businesses are facing further increases in wages as a result of the Chancellor’s announcement and this could be an expense too far for some firms. 

“More firms are looking to restructure or have early conversations with insolvency practitioners about their financial concerns and their insolvency options ahead of the new year. 

“This kind of activity won’t be reflected in the current set of insolvency statistics but it provides an insight into the mood, challenges and concerns of the business community as we come to the end of another difficult year.”

While there are still a few working days left in this calendar year, it’s never too early to start looking ahead and thinking about what you can do to begin 2025 in the best shape possible. 

Once positive piece of advice we can offer right now is to get in touch with us to arrange a free initial consultation with one of our expert advisors. 

Once they get a clear picture of your unique circumstances then they’ll be able to give you a tailored series of options 

No matter what your ambitions and goals are, they will be specific and appropriate for you and your business. 

The sooner you get in touch, the sooner you can start to implement changes that will benefit your company – not just now but well into next year and beyond.