R3 responds to July 2024 insolvency statistics

20 August 2024

• Corporate insolvencies decreased by 7.3% in July 2024 to a total of 2,191 compared to June's total of 2,363, and increased by 15.9% compared to July 2023's figure of 1,890. 
  • Corporate insolvencies increased by 8.9% from July 2022's total of 2,012 and increased by 52.2% compared to pre-pandemic levels in July 2019 (1,440).
• Personal insolvencies decreased by 0.2% in July 2024 to a total of 10,524 compared to June's total of 10,548, and increased by 24.1% compared to July 2023's figure of 8,479. 
  • Personal insolvencies increased by 11.1% from July 2022's total of 9,475 and decreased by 14.1% compared to pre-pandemic levels in July 2019 (12,253).

Tim Cooper, President of R3, the UK’s insolvency trade body, and a partner at Addleshaw Goddard LLP, says:

"Despite a decrease compared to last month, July's corporate insolvency figures are the highest we’ve seen for this month since 2019, as a result of increases in Compulsory Liquidation, Administration, and Creditors’ Voluntary Liquidation (CVL) numbers compared to July 2023 and 2019.

“CVLs continue to be the most common corporate insolvency process, although their numbers have fallen compared to last month and July 2022. These processes are used predominantly by smaller businesses and their increased take-up compared to July of last year and July 2019 reflects the challenging trading conditions these businesses have operated in over the past four years.

“Meanwhile, the rise in administration numbers compared to last year is potentially positive for business rescue prospects and highlights the importance of early advice for exploring rescue plans, while the increase in Compulsory Liquidation figures shows the ongoing financial pressures creditors are facing.

"Recent improvements in market and economic conditions, driven mainly by a successful summer of sport and more stability for businesses following the General Election, have led to better trading conditions for retail, hospitality, and construction businesses. The construction sector is expected to receive a further boost through the government's planned housing and infrastructure initiatives, although it will take time for them to have an impact.

“The improved economic and business climate should also result in greater acceptance and success of rescue proposals, and businesses of various sizes are showing a growing interest in Restructuring Plans, which is positive news for the profession.

"When it comes to personal insolvencies, the figures published today show a decrease from last month, an increase from July 2023, and a decrease from the July before the pandemic. The monthly fall is mainly driven by decreases in Debt Relief Orders (DRO) and Bankruptcies, while the number of people entering an Individual Voluntary Arrangement (IVA) has risen this month, and changes in DRO eligibility and the removal of its administration fee have also influenced the change in take up of this process compared to a year ago.

“It’s also worth noting that Breathing Space numbers have increased compared to June 2024, which highlights the ongoing debt challenges individuals in England and Wales are facing when you consider them alongside the slight fall in personal insolvencies we’ve seen month-on-month, as the combined figures for both processes are higher than they were in June of this year.

"The cost of living remains a concern, but consumers are cautiously optimistic, and are spending more on experiences while at the same time remaining wary of making major purchases.

“Despite the economic improvements, we urge individuals and businesses facing financial issues to seek advice early, and make the most of the free consultation most R3 members offer to allow them to explore potential solutions to their financial issues. Early advice gives a wider range of options and more time to address your financial issues before they escalate than if you had sought it once your problems became more severe."