3 Important Messages From The Latest Company Insolvency Statistics
It’s that time again: the Insolvency Service has released its latest company insolvency statistics report! The latest set of data summarises company insolvency levels in May 2024, offering a detailed look at the number of compulsory liquidations, creditors voluntary liquidations (CVLs), administrations, and company voluntary arrangements (CVAs) compared to both last year and last month. As usual, this report offers some valuable insights for UK businesses. Whether you are overperforming so far this year or struggling to navigate the current economic climate, here are the 3 most important messages from the latest company insolvency statistics.
Company Insolvency Numbers Have Decreased…
The headlines from the latest company insolvency statistics always revolve around the overall number of company insolvencies in the given month. The latest report highlights how, in May 2024, a total of 2,006 companies were registered insolvent. This figure was 6% lower than the previous month and a notable 21% lower than the same month in 2023.
A reduction in company insolvency numbers is certainly welcome news, particularly given the concerning rise in company insolvencies in April 2024. These changes are largely driven by a reduction in the number of reported administrations and CVLs both month-on-month and year-on-year.
… But Still Remain Much Higher Than Pre-Pandemic Levels
However, an even more notable message from the latest company insolvency statistics is that overall company insolvency levels remain significantly higher than the equivalent numbers reported pre-pandemic. This indicates that a vast number of companies are still struggling following a period of disrupted trading in lockdown, with the effects of subsequent supply chain issues and high inflation still being felt. These continued challenges faced by the economy leave many company directors with no option but to liquidate their business.
CVLs Are Accounting For The Majority Of Company Insolvencies
So what kind of actions are directors actually taking to mean that company insolvency levels are much higher than pre-pandemic conditions? Well, the latest company insolvency statistics highlight that it is a creditors voluntary liquidation proving to be the best course of action for most. In fact, in May 2024, CVLs accounted for the significant majority of all company insolvencies: 79% to be precise.
Creditors voluntary liquidation can be used by directors to stop pressing creditor action and close the company when insolvent. The fact that this process accounted for almost four-fifths of all company insolvencies in May 2024 therefore demonstrates that more and more directors are taking matters into their own hands when faced with financial difficulties, rather than waiting to be issued a winding-up petition by HMRC and having to deal with the negative repercussions of a compulsory liquidation.
What Happens Next For Businesses?
Despite threads of positivity in the latest company insolvency statistics, the overwhelming messages are still ones of concern. Company insolvency rates are high when compared to the pre-pandemic economy and we are yet to see any month-on-month decreases in overall company insolvency numbers become a more longstanding trend. UK businesses should therefore operate with a degree of caution and always seek professional advice if performance takes a turn for the worse.
If you are facing insolvency or are concerned about current conditions, don’t hesitate to get in touch with the expert team here at My Liquidation. We can provide you with professional liquidation advice which covers all of your options, enabling you to make an informed decision about the next steps and whether a creditors voluntary liquidation may be the most suitable action for your business.
