m-ZzOa5G8hSPI-unsplash

Azets responds to September 2024 company insolvency statistics

Richard Oddy, a restructuring and insolvency partner in Yorkshire for Azets, the UK top 10 accountancy and advisory firm, comments on the September 2024 company insolvency statistics for England and Wales:

“There were 1,973 registered company insolvencies in England and Wales last month [September], slightly up by 2% on August but down 7% compared to September 2023’s 2,130.

“However, the number of company insolvencies remain much higher than during the pandemic, when business life support measures such as the bounceback loan scheme of up to £50,000 were available and interest rates were at a record low.

“Whilst insolvency levels have returned to pre-pandemic levels, the long-tail impacts of previous high inflation, peaking at just over 11% two autumns ago, and the highest in 41 years, with the interest rate staircasing to a 16-year high at one point as the Bank of England tried to dampen the cost of living, resulting in higher borrowing costs on loans, along with hard-pressed households reining in spending, continue to be felt in business.

“August’s interest rate reduction from 5.25% to 5%, the first in over four years, was still not enough for those businesses which are highly leveraged, whilst fallaway inflation, now at 1.7%, may be of little comfort for companies which have been struggling through.

“We say this time and time again because it is so important – poor cashflow management can easily wreck businesses.

“If red lights flash on the financial dashboard, get professional advice promptly because turnarounds can happen with the right support.

“Interestingly, in the 12 months to August, compared to the same previous period, the number of insolvencies increased most in the accommodation and food services activities sector – control of cashflow can be notoriously difficult, with challenges such as labour and supply chain costs and fewer customers with disposable income due to the aftereffects of the cost-of-living crisis.”

CVLs accounted for 80% of all company insolvencies last month, up 2% from August but 9% lower compared to September 2023 – last year saw the highest annual number of CVLs since records started in 1960.

Compulsory liquidations, which were at a record low during the pandemic years 2020 and 2021, were 18% lower than August and 13% down compared to September 2023.

Administrations, which were at an 18-year low during 2021 before rising, were up 40% on August and 19% higher than September 2023, indicating a positive trend in turnaround and restructuring cases, which typically provide better outcomes for the wider economy.

CVAs were 55% higher in September compared to September 2023 but 15% lower than in August; numbers “remain low compared to historical levels”, the Insolvency Service noted.

The five industries which experienced the highest number of insolvencies in the 12 months to August 2024 were construction (4,310), wholesale and retail trade; repair of motor vehicles and motorcycles (3,814), accommodation and food service activities (3,712), administrative and support service activities (2,438) and manufacturing (1,956).

Azets is a UK top 10 accountancy firm with 335 staff in Yorkshire where it has offices in Leeds, Bradford and York.