The latest data from the Insolvency Service has revealed a significant decline of 17% in business insolvencies in England & Wales in March 2024 compared to February 2024 (2,177) and March 2023 (2,193). This decrease reflects a positive trend in the business landscape, indicating a potential stabilisation amidst ongoing economic challenges.
In March 2024, a total of 1,815 business insolvencies were registered, comprising 261 compulsory liquidations, 1,437 creditors’ voluntary liquidations (CVLs), 108 administrations, and 9 company voluntary arrangements (CVAs). Notably, CVLs accounted for 79% of all company insolvencies, representing a decrease of 18% from the previous month.
While the number of compulsory liquidations decreased by 3% from February 2024 and 9% from March 2023, administrations saw a significant decrease of 30% from the previous month and 14% from the same month last year, following seasonal adjustment. Additionally, CVAs experienced a notable decline of 25% compared to March 2023 and 31% compared to February 2024. Despite these fluctuations, overall insolvency numbers remain higher than pre-pandemic levels, indicating ongoing challenges faced by businesses.
Tim Cooper, President of R3, emphasized that the reduction in corporate insolvency numbers is primarily driven by a decrease in Creditors’ Voluntary Liquidations. However, he cautioned that these numbers remain higher than pre-pandemic levels, reflecting the continued impact of high costs and constrained spending on businesses, particularly in sectors such as construction.
Simon Edel, UK Turnaround and Restructuring Strategy Partner at EY-Parthenon, highlighted the increase in activity across the restructuring spectrum, indicating a rising focus on working capital as companies adapt to a changing market. He underscored the importance of refinancing for businesses, urging proactive measures to protect balance sheets and improve liquidity ahead of refinancing events.
Daniel Staunton, Senior Associate in the Restructuring & Insolvency team at Kingsley Napley, noted a change in direction in the trajectory of UK insolvencies, suggesting a potential improvement in the business climate. However, he cautioned against prematurely labeling this as a trend reversal, emphasizing the need for continued vigilance and proactive measures by businesses.
Oliver Collinge, Director at PKF Littlejohn, stressed the importance of early action and seeking advice for struggling businesses, particularly SMEs, which comprise 99% of all UK businesses. He emphasized the critical role of early intervention in securing the long-term survival of businesses and enabling SMEs to thrive.
In conclusion, while the decrease in business insolvencies is a positive development, challenges persist, particularly in sectors like construction, retail, and food and beverage. Businesses are urged to remain vigilant, seek advice proactively, and take necessary measures to navigate the evolving economic landscape.
