January 2024 Insolvencies: An Ominous Start to the Year

The Insolvency Service’s monthly report has recently been released, and provided little hope for those with their fingers crossed for a stronger new year. As we saw throughout 2023, the number of insolvencies recorded were routinely higher than those in the year prior, and so far, 2024 has shown little to suggest any different for the near future.

Throughout England and Wales, January saw 1,769 company insolvencies. This figure is 5% higher than the 1,685 seen in January 2023, which in itself was 7% higher than January 2022’s number.

While many had previously hoped that the consistent rise in insolvencies was merely a return to pre-pandemic levels after government support schemes had propped up some struggling businesses, this has not proven to be the case. Insolvencies passed pre-pandemic levels some time ago, and still appear to be trending upwards.

Rick Smith, Managing Director of Forbes Burton, suggested that things are unlikely to change in the short-term. Commenting on the latest Insolvency Service report, he said that “with no change in the external factors putting pressure on UK businesses, there’s little wonder that the continuing rise in insolvencies hasn’t abated yet.

“Until the conflict between Russia and Ukraine is resolved, or something is done to tackle rising inflation, we’re likely to see the same story play out month over month. The cost-of-living crisis has affected most UK families, and once the public start to keep their money in their pockets, its effect tends to spread upwards through businesses and corporations. What many businesses are experiencing now is the unfortunate cocktail of reduced custom mixed with increased operating costs”.

Breaking down the figures

In breaking down January’s figures, we can see that there’s been a significant increase in certain types of insolvency proceedings. The 339 compulsory liquidations marked a 66% rise compared to January 2023, while the 120 administrations filed was 40% higher than those recorded in the same period.

16 CVAs went through too, which is another increase on January 23’s numbers, with the 1,294 CVLs marking the only decline in numbers. This was 6% fewer than those registered a year ago.

Some could optimistically point to January’s numbers being inflated by companies that had hoped for a strong festive period that never materialised. If this is the case, fewer February insolvencies may be expected, but unfortunately, the previous two years’ statistics don’t bear a great deal of weight to this theory. February 2023 saw over 100 more corporate insolvencies than the January preceding it.

Finding the current business climate challenging?

You’re certainly not alone. Thankfully, there are steps you can take to make things easier. Whether it be the renegotiating of debts, restructuring of your business, or even closing up and starting afresh, we ‘ve got the solutions to suit any company.

We’ve helped countless businesses to navigate difficult situations and have been trusted by directors nationwide to deliver honest and effective advice. Companies across most sectors now are struggling with rising inflation, the cost-of-living crisis, and soaring energy bills. Call us on 0800 975 0380, or email [email protected] for a free consultation to find out how we can help.