• 25 Jun 2024
• •
• 4 min read

Update on insolvency statistics: May 2024

The latest insolvency statistics for May 2024 for company and individual insolvencies have been published on 18 June 2024 for England and Wales.  This comes just before the announcement on 19 June 2024 by the Office for National Statistics, that UK inflation fell to the Bank of England’s target of 2.0% in May 2024 (compared with 2.3% in April 2024).

The latest insolvency rates show a marginal reduction in the numbers of company and personal insolvencies compared with April 2024, with company insolvencies 21% lower compared with the same period last year. 

This opens up the question of whether the peak of corporate failures may have passed for the time being, with green shoots of recovery potentially apparent. Those battling with personal debt may continue to feel the impact of the economy for some time.  Only time will tell as to how this plays out in the weeks and months to follow, with a change in Government and economic policy likely around the corner.

The main points to draw out of the latest insolvency statistics are as follows:

Company insolvency

• There were 2006 registered company insolvencies in England and Wales in May 2024, which is 6% lower than in April 2024 (2,144) and 21% lower than the same month in the previous year (2,547 in May 2023, the highest monthly number since October 2008).

• Company insolvencies have still remained much higher than those seen both during the COVID-19 pandemic and between 2014 and 2019.

• Company insolvencies in May 2024 consisted of 271 compulsory liquidations, 1,590 creditors’ voluntary liquidations (CVLs), 126 administrations and 19 company voluntary arrangements (CVAs). Numbers of CVLs and administrations were lower than in both May 2023 and April 2024, while the number of compulsory liquidations was lower than in May 2023, but higher than in April 2024 .

• One in 180 companies on the Companies House effective register (at a rate of 55.6 per 10,000 companies) entered insolvency between 1 June 2023 and 31 May 2024. This was an increase from the 54.2 per 10,000 companies that entered insolvency in the 12 months ending 31 May 2023.

• 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

• Individual insolvencies have increased from the same time last year. There were 9,266 individuals who entered insolvency in England & Wales in May 2024. This was 4% lower than in April 2024 and 3% higher than in May 2023.

• The individual insolvencies consisted of 604 bankruptcies, 3,716 debt relief orders (DROs) and 4,946 individual voluntary arrangements (IVAs). The number of IVAs registered in May has decreased from the numbers seen over the past 12 months and has dropped to its lowest level since 2017. The number of DROs in May 2024 increased compared to April 2024, a record high from when they were introduced back in 2009. From 6 April 2024 the £90 administration fee payable to register a DRO has been removed and in turn, this has coincided with higher DRO numbers in April and May 2024. Bankruptcies have remained at about half of pre-2020 levels, lower than in the past 12 months and slightly lower than in May 2023.

• In the 12 months ending 31 May 2024, one in 463 adults in England & Wales entered insolvency (a rate of 21.6 per 10,000 adults). This is lower than the rate of 23.9 per 10,000 adults (1 in 418) who entered insolvency in the 12 months ending 31 May 2023.

• There were 7,652 Breathing Space registrations in May 2024. This is 14% higher than in May 2023.

View from Trethowans

The latest statistics for companies shows that the economy continues to see the effects of the backlog caused by the Covid-19 pandemic. In recent months, we have noticed a slight uptick in insolvencies of companies that are sub-contractors in the construction supply chain, both inside and outside of the South region with lack of available lending to restructure historic Covid debt being the main catalyst for entering formal insolvency. In most cases, we have been able to assist with business rescues and failing which a positive outcome for creditors with sales of assets, out of administration or liquidation. We have noticed an increase need for directors to take care and find solutions around the restrictions on the re-use of the liquidated company’s name or trading style which is triggered on liquidation and we have managed to secure positive outcomes enabling the name use to continue.

We are also noticing an increase in the number of claims being pursued by Insolvency Practitioners against directors of insolvent companies, particularly claims for misfeasance, transactions at an undervalue and preferential payments, many of which are also linked to claims where directors took Bounce Back Loans (BBLs) during the pandemic.

We are interested to note whether the individual insolvency figures yet factor in any bankruptcies on the back of company failures (given the prevalence of personally guaranteed debts). The drop in figures for individuals is somewhat surprising, given the ongoing cost of living crisis reported so heavily in the media. The changes to DRO management fees, an increase in those numbers and a drop in bankruptcies and IVAs could be the result of people looking at other means of avoiding personal insolvency, as more and more people in the modern world rely on applying for credit to live comfortably. The statistics published do not show figures for people entering into informal debt solutions such as debt management plans, but it would be interesting to see how many people are entering into such arrangements, to see whether this has increased.

This information is current as at 25 June 2024

To speak to one of the team you can get in touch here or call us on 0800 2800 421.