R3 responds to February 2024 insolvency statistics

15 March 2024

R3 responds to February insolvency stats

• Corporate insolvencies increased by 18.5% in February 2024 to a total of 2,102 compared to January's total of 1,774 and increased by 16.7% compared to February 2023's figure of 1,801.
• Corporate insolvencies increased by 38.5% from February 2022's total of 1,518 and increased by 73.3% when compared to pre-pandemic levels in February 2019 (1,213).
• Personal insolvencies increased by 25.1% in February 2024 to a total of 10,136 compared to January's total of 8,103 and increased by 23% compared to February 2023's figure of 8,239.
• Personal insolvencies increased by 3% from February 2022's total of 9,837 and increased by 22.4% when compared to pre-pandemic levels in February 2019 (8,278). 

Nicky Fisher, President at R3, the UK’s insolvency and restructuring trade body comments on the publication of the February 2024 insolvency statistics:

“The monthly and yearly rise in corporate insolvencies is a result of a rise in both Creditors’ Voluntary Liquidations and administrations, as more directors choose to close down their businesses or are seeking specialist help in an effort to survive.

“February’s administrations numbers were the highest level we’ve seen in February in more than four years, which is a sign that more and more businesses are at a point where a sale or a liquidation may be their only option.

“Businesses are still suffering the after-effects of last year’s economic turbulence. Rising fuel, energy and funding costs and cautious consumer spending are continuing to take their toll on bottom lines and make it harder for businesses to break even.

“While there is still some optimism among firms about what the next year has in store, the economic conditions remain a key area of concern for many and unless things improve, we could see more and more firms turning to an insolvency process to help resolve their financial issues. 

“Directors and management teams need to remain vigilant and take action as soon as they spot any signs the business could be financially distressed, as doing so gives them more time to take a decision, more potential options for resolving the situation, and a greater chance the business can be rescued.

“Turning to personal insolvency, February’s total is the highest we’ve seen in 11 months, and the highest we’ve seen in February for more than four years. The monthly rise has been driven by an increase in both Individual Voluntary Arrangements and Debt Relief Orders, while yearly, we’ve seen a rise in all forms of personal insolvency process.

“Today’s figures highlight that the cost of living remains a major concern, and a major challenge, for many people in England and Wales. High energy costs are at the front of most people’s minds, and while food inflation is falling, prices are still higher than they were a year ago. People are looking to save money wherever they can, and are reluctant to make major purchases.

“The Government’s decision to remove the fee for entering a Debt Relief Order (DRO) and increase the debt threshold for this process to £50k is likely to mean an increase in the number of people entering a DRO and a fall in the amount of people entering other processes.

“We urge anyone who is worried about their finances to seek advice as soon as possible. Money worries are one of the hardest things to talk about, but having that conversation at an early stage will give you more options and more time to take a decision than if you’d waited until the situation became more severe.

“Most R3 members will give prospective clients a free consultation so they can learn more about their circumstances, and outline the potential options that are open to them to address them.”