October figures see reductions in every category except receiverships

As business owners and directors across the country are gearing up for hopefully their busiest season of the year, the latest monthly corporate insolvency figures from The Insolvency Service for October have been released with a surprise.

The total number of company insolvencies in England and Wales in October saw a total of 1,747 recorded. 

This is the lowest monthly total recorded since January 2023 and is 24% lower than last October’s total and 10% lower than the number from the previous month of September. 

Despite these reductions the figures are still higher than any other corresponding October from 2014-2019 and the Covid-19 era from 2020 to 2022. 

Analysis

Of the 1,747 corporate insolvencies recorded in October, the most frequently occurring processes were Creditors’ Voluntary Liquidations (CVLs) with 1,445.

This is a 7% reduction on the previous month’s total and is 24% lower than the same period 12 months ago. 

CVLs make up 83% of all the corporate insolvencies recorded in October, an increase of 3% and the highest proportion seen in over six months. CVLs had been increasing at approximately 10% a year between 2017 and 2019 before the pandemic had repressed these numbers. 

2023 saw the highest number of CVLs recorded in one year since records began in 1960.

There were a total of 188 compulsory liquidations recorded in October, which was the lowest monthly total of 2024. This was a 14% reduction on last month’s total and down 20% from October last year. 

Like CVLS, compulsory liquidations increased by 44% in 2023 after being temporarily restricted during the pandemic due to the official halt of recovery procedures but remain approximately 4% lower than their pre-pandemic levels.

HMRC are continuing to crackdown on outstanding arrears with more staff and resources being allocated in the October Budget, so expect this number to rise through the use of statutory demands and winding up petitions to chase overdue and owed corporation tax, VAT, PAYE and National Insurance Contributions (NICs).

There were 100 administrations in October which was a 35% reduction on September’s total and an annual monthly decrease of 28%. Administrations remain roughly at their comparable pre-pandemic levels after recovering from 18-year lows during the pandemic. 

12 Company Voluntary Arrangements (CVAs) were recorded in October which was a reduction of 29% (five cases) from the previous month and is 48% lower than the same month in 2023.

CVAs had increased by 68% annually in 2023 from their lowest total since 1993 although numbers are still approximately half those seen between 2015 and 2019. 

Directors are looking at the CVA and administration procedures and deciding that they’ll explore the options and legal protections granted to them that will enable them to reduce their debts and restructure their business and finances rather than go straight to a liquidation process.

There were two receivership appointments in October which is incredibly rare as there were only two recorded in the previous 12 months up to October 2024. 

Four restructuring plans were registered at Companies House last month but no moratoriums. Since June 2020, 57 companies have obtained an insolvency moratorium to pause legal actions from creditors while they restructured and a further 34 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 186 companies (at a rate of 53.8 per 10,000 companies) entered insolvency between 1 November 2023 and 31 October 2024. 

This was a decrease from the 55 per 10,000 companies that entered insolvency in the 12 months ending 31 October 2023. 

The Insolvency service produces 12-month rolling rates calculated as a proportion of the total number of active companies which they say highlights the longer term trends and tunes out any monthly volatility – although both monthly and rolling numbers have increased.

Scotland

In Scotland last month there were 116 company insolvencies – an increase of 18% from September. 

This total consisted of 60 compulsory liquidations (up from 18); 50 CVLs (up from 48); five administrations (down from seven) and one receivership appointment. No CVAs were recorded last month. 

Between 26 June 2020 and 30 September 2024, there were two restructuring plans in Scotland and no moratoriums.

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

This shows that more Scottish directors and their accountants are being proactive and taking difficult but practical decisions earlier rather than relying on their creditors to take action themselves and force the closure of their companies.

The total insolvency rate in Scotland in the 12 months up to and including October 2024 was 53.1 per 10,000 companies on the effective register. This was up from 52.5 from the preceding 12 months ending October 2023. 

Northern Ireland

In October, there were 31 company insolvencies in Northern Ireland. This was three higher than last month and is 15 higher than in October 2023. 

The total number of company insolvencies was made up of 17 compulsory liquidations (up from 15); 12 CVLs (up from ten); one administration (down from two) and one CVA (no change). There were no receivership appointments. 

There was one moratorium in Northern Ireland between 26 June 2020 and 31 October 2024 and no restructuring plans.

The total insolvency rate in the 12 months up to and including October 2024 in Northern Ireland was 38.5 per 10,000 companies on the effective register. This is an increase of 0.2 from the 12 months to October 2023.  

The total number of company insolvencies for the whole of the UK in October was 1,894 – an overall reduction of 180.

Directors of solvent companies chose to wind down their businesses before any tax changes were announced

Tim Cooper, President of R3, the insolvency and restructuring trade body said: “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 Liquidations 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’ve 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 (NICs) 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, they should consider seeking advice from qualified sources 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 large businesses turning to this process in recent weeks to help improve their financial position and keep their business 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.”

We totally agree and think there’s no better time 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 circumstances, they’ll be able to give you a tailored series of options that are applicable and appropriate for you and your business goals. 

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