• 31 Jul 2024
• •
• 3 min read

Update on insolvency statistics: June 2024

The latest insolvency statistics for June 2024 for company and individual insolvencies have been published on 19 July 2024 for England and Wales.

This is the first publication of statistics released since the recent General Election and announcement in June 2024 of a continued fall in the rate of inflation. It shall be interesting to see what effect the recent political changes will have on the insolvency landscape.  

Key takeaways from the latest statistics are summarised below:

Company insolvency

• This month has shown an increase in the number of company insolvencies, with June 2024 being 16% higher than May 2024 (2361 were registered in June 2024, compared to 2040 in May 2024). This is also 17% higher than the same month in the previous year (2016 in June 2023). Interestingly, the figures are also much higher than the insolvencies seen during the Covid-19 pandemic and between the period of 2014 and 2019.
• Company insolvencies in June 2024 consisted of 302 compulsory liquidations, 1,866 creditors’ voluntary liquidations (CVLs), 170 administrations and 23 company voluntary arrangements (CVAs). All types of company insolvency were higher than in both June 2023 and May 2024.
• However, while the insolvency rate has increased since the lows seen in 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession. This is because the number of companies on the effective register has more than doubled over this period.

Individual insolvency

• Like corporate insolvencies, the number of individuals entering insolvency has also increased in England and Wales in June 2024, being 11% higher than May 2024 and 33% higher than June 2023.
• The individual insolvencies consisted of 651 bankruptcies, 4,383 debt relief orders (DROs) and 5,361 individual voluntary arrangements (IVAs). The number of DROs in June 2024 increased compared to May 2024, which coincides with the recent removal of the £90 administration fee to obtain a DRO from 6 April 2024. The number of IVAs registered in June was similar to the numbers seen over the past 12 months. Bankruptcy numbers remained at about half of pre-2020 levels, but similar levels to those seen in the last 12 months.
• There were 6,970 Breathing Space registrations in June 2024. This is 12% lower than in June 2023. This has dropped from May 2024, during which there were 7652 registrations.

View from Trethowans

The latest figures for companies have shown an increase in insolvencies, however many of our local insolvency contacts have reported a slightly quieter period and a steadying of the rate of new company appointments compared with earlier in the calendar year.  The increase nationally is not altogether surprising however, due to the effects of the backlog caused by the pandemic and the growing rise in costs for both individuals and businesses.

We are continuing to see instructions on claims by administrators and liquidators against directors relating to antecedent transactions during the pandemic period and typically including recovery of directors’ loan accounts, particularly where directors have drawn a minimal salary and taken remuneration in the form of dividends prior to the company entering formal insolvency.  The current upward rate of company insolvencies will undoubtedly result in claims in the months and years to come for companies failing during this period.

It will be interesting to see whether the change in Government will have any bearing on the rate of corporate insolvencies, given that many of those running ailing businesses, may have been waiting to see what the result of the election was, before taking further action. Labour promised in their manifesto to cap corporation tax at 25% and have pledged not to increase National Insurance, Income Tax and VAT. This will be welcome news for businesses who may well want to wait and see the impact of these changes including measures to be introduced in the Autumn budget in a few months’ time.

There is an expectation of a focus on the new government investing more into HMRC by providing 5,000 more staff to work on reducing the ‘tax gap’. This may result in a further and sustained increase in the enforcement activity of HMRC. We shall continue to monitor the number of referrals we see internally closely for these types of enquiries.

How can we help?

Trethowans have a specialist team of lawyers both in our Restructuring & Insolvency and Commercial Litigation teams who have vast experience in acting for Insolvency Practitioners, directors and creditors for restructuring and insolvency related enquiries. If you require further advice, please do not hesitate to contact Melia Hirst or Maria Evans to discuss your enquiry further.

This information is current as at 24 July 2024.