Thousands of UK companies in 'perilous' financial position as businesses go bust

Official figures show that the number of registered company insolvencies in England and Wales totalled 1,966 in November, up by 13% compared to the previous month

Official figures have revealed a rise in the number of UK companies going bust last month, with experts sounding the alarm that a growing number of businesses are in a "perilous financial position" due to heavy debt burdens.

The Insolvency Service's latest data indicates that there were 1,966 registered company insolvencies in England and Wales in November, marking a 13% increase from the 1,743 reported in October.

This rise was seen across nearly all types of company insolvency, including an 8% month-on-month surge in creditors’ voluntary liquidations (CVLs), which hit 1,565. CVLs occur when a company's directors opt to shut down the business because they can't pay off its debts, and these account for the majority of company insolvencies.

Compulsory liquidations also saw a significant 37% jump from the previous month, reaching 254 cases. Additionally, the number of administrations climbed by 36%, totalling 132.

Despite the average monthly insolvencies in 2024 being similar to those in 2023—which witnessed the highest annual total in three decades—November's figure was still 12% lower than the same month last year. David Hudson, a restructuring advisory partner at FRP, commented on the situation: "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 Budget's key measures announced last October involved a hike in employer national insurance rates, scheduled to kick in from April. The industry hardest hit by insolvencies for the year leading up to October was the construction sector, grappling with skyrocketing costs and a slump in demand for new houses.

Coming in close behind was the wholesale and retail trade, as well as the accommodation and food service sectors, the figures demonstrate. Homebase emerged as one of the prominent casualties when it revealed last month that administrators had been enlisted, after bearing the brunt of an "incredibly challenging" three years for the DIY industry.

The company was thrown a lifeline when retail giant CDS bought it in a resuce deal promising to keep about 70 stores, although the future of an additional 49 outlets remains uncertain.

Typhoo tea also fell administration during November, its 120-year heritage unable to weather a continual sales downturn and growing debts. It was later bought out of administration by vapes and batteries maker Supreme.