Company Insolvency Statistics September 2024 – What Struggling Business Owners Need to Know

• Creditors’ Voluntary Liquidations (CVLs): The most common type, with 1,575 CVLs, making up 80% of all company insolvencies. CVLs increased by 2% from the previous month but were 9% lower than September 2023.
• Compulsory Liquidations: There were 226 compulsory liquidations, an 18% decrease from August 2024 and 13% lower than in September 2023.
• Administrations: 155 administrations were recorded, showing a significant 40% increase from August 2024 and 19% higher than September 2023.
• Company Voluntary Arrangements (CVAs): There were 17 CVAs, 15% lower than August 2024 but 55% higher than in September 2023.

Several factors contribute to the rise in insolvency figures:

• Post-COVID Economic Strain: Many businesses, especially in sectors like retail and hospitality, are still struggling with the aftereffects of the pandemic. Government support schemes have ended, leaving vulnerable companies exposed to financial pressures.
• Inflation and Rising Costs: High inflation, increasing interest rates, and supply chain disruptions have exacerbated financial strain for businesses. These factors are causing many companies to face unsustainable levels of debt.
• Bounce Back Loan Repayments: Businesses that took out government-backed loans during the pandemic are now facing repayment deadlines, contributing to cash flow challenges.

For directors facing financial difficulties, it’s important to understand the different types of insolvency and how they could apply to your business:

• Creditors’ Voluntary Liquidation (CVL):
  A CVL occurs when a company’s directors choose to voluntarily close their business because it cannot pay its debts. It allows the directors some control over the process compared to a compulsory liquidation. The fact that CVLs make up 80% of all insolvencies suggests that many directors are actively seeking to wind down their businesses before matters escalate.
• Compulsory Liquidation:
  This is initiated by creditors who take legal action to force a business into liquidation. The 18% month-on-month decrease indicates that fewer creditors are resorting to this option, possibly due to directors taking earlier action to liquidate voluntarily.
• Administration:
  When a business is placed into administration, an appointed administrator seeks to restructure the company or sell its assets to pay off debts. The significant rise in administrations in September 2024 shows that more businesses are looking for restructuring solutions, rather than complete liquidation.

• Company Voluntary Arrangements (CVAs):
  A CVA allows businesses to reach an agreement with creditors to pay off a portion of their debts over time. The 55% year-on-year increase in CVAs indicates that more businesses are attempting to survive by negotiating with creditors rather than closing outright.

1. Assess Your Cash Flow:
   Cash flow is one of the leading causes of insolvency. Ensure you have a clear understanding of your cash inflows and outflows. Can you meet your financial obligations over the coming months?
2. Negotiate with Creditors:
   If you’re struggling with debt, consider negotiating with creditors for more favorable payment terms. A CVA may be an option if you believe your business has the potential to recover.
3. Seek Professional Advice:
   Speaking to an insolvency expert can help you explore your options, whether that’s restructuring, voluntary liquidation, or another route. The earlier you seek advice, the more options you’ll have available.

Insolvency statistics vary by industry, with certain sectors being hit harder than others. The five industries with the highest insolvency numbers in the 12 months to August 2024 were:

• Construction: 4,310 cases (17% of total insolvencies)
• Wholesale and Retail: 3,814 cases (15% of total)
• Accommodation and Food Service: 3,712 cases (15% of total)
• Administrative and Support Services: 2,438 cases (10% of total)
• Manufacturing: 1,956 cases (8% of total)

These sectors are particularly vulnerable due to rising costs, supply chain disruptions, and post-pandemic recovery struggles.

Business owners in these industries should be especially vigilant about their financial situation.

If your business is experiencing financial difficulty, it’s critical to take action as soon as possible. Here’s what you can do:

• Get Professional Help: Contact insolvency practitioners who can help you explore all available options, including restructuring and liquidation.
• Consider All Options: Whether it’s negotiating with creditors or seeking a Company Voluntary Arrangement, understanding all your options can help you make informed decisions.
• Act Early: The earlier you seek advice and assistance, the more choices you will have to protect your business.