- Corporate insolvencies increased by 2.9% in February 2025 to a total of 2,035 compared to January 2025’s total of 1,978, and decreased by 7% compared to February 2024’s figure of 2,188.
- Corporate insolvencies increased by 3.6% from February 2023’s total of 1,964.
- Personal insolvencies increased by 4.1% in February 2025 to a total of 10,147 compared to January 2025’s total of 9,752, and decreased by 5% compared to February 2024’s figure of 10,684.
- Personal insolvencies increased by 9.4% from February 2023’s total of 9,279.
Tom Russell, Vice President of R3, the UK’s insolvency and restructuring trade body, says:
“The monthly increase in corporate insolvencies is driven by a rise in Compulsory Liquidations, which are at their highest level in more than five years, while the year-on-year reduction is due to a fall in Creditors’ Voluntary Liquidations (CVLs) and Administrations. Compulsory liquidations are often initiated by HM Revenue and Customs or local authorities as a measure of last resort and the increase indicates a toughening of the position towards debts owed by companies to the public sector and the ongoing efforts of government to help balance their books.
“A number of economic and political issues are continuing to drive insolvencies and affect businesses across the supply chain. High costs and cautious consumer and client spending mean creditors are being more aggressive about pursuing the money they are owed and aren’t afraid to turn to the courts to recover outstanding debts, while a large proportion of directors of insolvent businesses feel closure is the only option open to them after years of trading through tough conditions and with little hope of these improving in the short-term.
“With firms facing further increases in expenses when the increases to National Insurance and National Minimum Wage are introduced in April, enquiries for restructuring and insolvency support are increasing as directors look to take specialist advice about their business finances, and we expect this to continue for the next few months as the impact of the rise in outgoings becomes apparent. This is a particular issue for small businesses as they can find it difficult to pass on extra costs to customers whilst remaining competitive, and many businesses of this size will inevitably be considering making savings through, for example, reduced investment or reductions in staff levels.
“From a sectoral perspective, retail and hospitality firms are continuing to suffer as consumers continue to cut back their discretionary spending, while construction output has been affected by a fall in new work and poor weather, and manufacturing has continued to be affected by cost and trade issues, which have hit demand and output levels. All of these sectors have had to contend with continuing increases in costs alongside these challenges, and are likely to be among those most affected by the NI changes that are being introduced in April.
“When it comes to personal insolvencies, the monthly increase is driven by a rise in the number of people entering an Individual Voluntary Arrangement (IVA), while the year-on-year fall in numbers is due to a reduction in IVAs and Bankruptcies.
“It would seem that the cost of Christmas and rising bills have led to more people seeking help with their debts, which is why numbers for this process and for overall personal insolvencies are higher this month than they were last month. These figures serve as a stark warning of the financial challenges facing individuals, especially with the anticipated surge in household bills in April. The upcoming increases in the energy price cap, council tax, and water bills are likely to exacerbate existing debt problems and drive further insolvencies.
“Looking at the insolvency and Breathing Space figures for last month, it’s clear that debt remains a serious issue for many people in England and Wales. People are struggling to manage their expenses in a world where food and energy costs are still rising, and they remain very careful about how they spend their money as they expect this to continue over the next couple of months.
“While consumers appear to be more optimistic about their future finances, they’re still reluctant to make major purchases unless they’re absolutely necessary and are looking to save wherever they possibly can. We’re also hearing reports people are using credit to pay their bills, and while we understand that this isn’t a choice, it’s also not a sustainable means of managing money.
“We urge anyone who is worried about their business or personal finances to seek advice as soon as possible. We know how hard it is to talk about your money worries but having that conversation when these are at early stage will give you more options for resolving them and more time to decide how you move forward than if you’d waited until the problem became more severe.
“Most R3 members will offer a free consultation to prospective clients so they can learn more about the issues they are facing and outline the potential solutions that could help resolve them.”
