June 2024 Insolvency Statistics
July 24, 2024
Latest figures from the Insolvency Service indicate that the number of registered company insolvencies in England and Wales reached 2,361 in June 2024, marking a 16% increase from May 2024’s total of 2,040 and a 17% rise from June 2023, which saw 2,016 insolvencies.
Jodie Wildridge, deputy chair of the UK’s insolvency and restructuring trade body R3 in Yorkshire and a barrister at Exchange Chambers in Leeds, comments on the publication of the June 2024 Insolvency Statistics:
“The increase in corporate insolvencies is driven by an increase in Creditors’ Voluntary Liquidations – a process usually used by smaller businesses, and which is often driven by cashflow problems or difficulties with access to finance. Compulsory liquidation numbers have also risen to their second-highest level since January 2021 and suggests that creditors are taking a much tougher stance this financial year.
“But there are some positive signs in the figures – Company Voluntary Arrangement and Administration numbers have increased compared to last month, and Administration numbers are higher than this time last year and in June 2019. The profession will always try to rescue businesses wherever it possibly can, and this trend suggests that there are an increasing number of businesses for whom this is an option and whose secured creditors are willing to support rescue proposals.
“The reality is that businesses are still trading amidst high costs and cautious consumer spending, and despite recent more encouraging economic data pointing to increasing economic growth and falling inflation, the trading environment is still challenging for many businesses, and it seems that the economic improvement has come too late for some.
“While retail sales rebounded in May, they are still down year-on-year, and restaurant spending fell again last month as consumers continued to be cautious with discretionary spending to save money. These sectors have struggled since the start of the year and have yet to bounce back from a disappointing pre-Christmas trading period, so we may see insolvency numbers increase in the Autumn if trading conditions don’t improve.
“There was positive news for the construction sector, which saw growth in May after a disappointing start to 2024 and a delay in new work at the end of last year. While the uncertainty the General Election will have brought this sector is likely to impact firms and output in the short-term, the new Government’s pledges to invest in infrastructure and encourage housebuilding could reinvigorate two key markets for this industry if they come to fruition.
“The statistics show that levels of CVLs have been high for some time now – CVLs are typically the insolvency procedure used by SMEs. The new Government has committed to a number of new policies during the General Election campaign which are designed to boost the business community – especially SMEs.
“Their pledge to reform business rates to be fairer may benefit businesses in the retail and hospitality sector, while plans to introduce legislation to tackle late payments, if effective, will improve cashflow for businesses and free up resources that will potentially allow firms to focus on investment and growth instead of chasing money they are owed and managing cashflow. These measures will take time to introduce and may come too late to help those who are currently struggling.
“It’s also worth noting that many businesses continue to be optimistic about the future, with lower inflation and the prospect of higher sales and profits boosting their confidence about the coming months, but we’ve yet to see the full impact of the General Election on the economy and purchasing decisions, and despite their optimism about the future, organisations remain concerned about customer demand, staff turnover and meeting their regulatory requirements.”
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