The number of UK companies going bust increased last month, official data shows, as experts warned that more businesses face a ‘perilous financial position’ as they remain weighed down by debts.
Official data from the Insolvency Service showed that the number of registered company insolvencies in England and Wales totalled 1,966 in November.
This was 13% higher than the 1,743 reported in October, with nearly all types of company insolvency increasing.
This included an 8% month-on-month increase in the number of creditors’ voluntary liquidations,CVLs, at 1,565.
CVLs refer to directors of a company deciding to close it down if debts cannot be paid, and make up the bulk of company insolvencies.
Compulsory liquidations also spiked by 37% compared with the previous month, to 254.
The number of administrations was 36% higher at 132.
The average number of monthly insolvencies over 2024 has been similar to 2023, which saw the highest yearly total in 30 years.
Despite this, November’s total was 12% lower than the same month a year ago.
David Hudson, restructuring advisory partner at specialist business advisory firm FRP Advisory Group PLC, said: ‘Despite a year-on-year fall, a shorter-term ramping up of insolvencies amid the festive season is a stark reminder of the perilous financial position many firms find themselves in.
‘Insolvency levels have remained high throughout the course of the year and, despite improving economic conditions – including lower levels of inflation and rate cuts – we anticipate them remaining so in 2025 as firms continue to carry unsustainable levels of debt.
‘Increased national insurance contributions will add to firms’ costs next year, and businesses in consumer-led sectors like retail, leisure and hospitality are likely to be at risk should Christmas trading prove underwhelming.’
One of the measures announced in October’s budget was a planned increase to the rate of employer national insurance, which will take effect from April.
The industry to experience the highest number of insolvencies in the year to October was construction, which has been squeezed by higher costs and weaker demand for housebuilding.
This was followed by wholesale and retail trade, and accommodation and food services, according to the data.
Homebase was one of the household names to announce it had called in administrators last month, after being hit hard by an ‘incredibly challenging’ three years for the DIY sector.
The DIY and garden firm was sold to retail group CDS in a rescue deal securing up to 70 stores, but leaving the future of its remaining 49 shops in the balance.
Typhoo tea also fell into administration in November after the 120-year-old brand suffered several years of declining sales and mounting debts.
It was later bought out of administration by vapes and batteries maker Supreme PLC.
By Anna Wise, PA Business Reporter
Press Association: Finance
source: PA
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