R3 responds to August 2024 insolvency statistics

• Corporate insolvencies decreased by 8.9% in August 2024 to a total of 1,953 compared to July’s total of 2,144, and decreased by 14.6% compared to August 2023’s figure of 2,286.
  • Corporate insolvencies also increased by 2.8% compared to August 2022 (1,900).
• Personal insolvencies decreased by 5.1% in August 2024 to a total of 10,000 compared to July’s total of 10,536, and increased by 15.6% compared to August 2023’s figure of 8,652.
  • Personal insolvencies also increased by 4.5% compared to August 2022 (9,569).

Jodie Wildridge, deputy chair of the UK’s insolvency and restructuring trade body R3 in Yorkshire and a barrister at Exchange Chambers in Leeds, says:

“The monthly fall in corporate insolvency figures is likely to be a result of the traditional slowdown in appointments we see during August and shouldn’t distract from the fact that businesses are still struggling and many are still trying to manage high levels of debt at a time when trading conditions remain difficult.

“While the overall economic picture has improved, the market remains a challenging one, and managing costs is still very much a key concern for many directors. From a sectoral perspective, retail sales increased in the summer and construction output increased in July, but it remains to be seen whether this is enough to compensate for months of challenging trading conditions and whether the critical pre-Christmas trading period can provide the boost companies right across the economy badly need.

“Looking more broadly, now the Bank of England’s Monetary Policy Committee has made its decision on the rate of interest, firms may be prepared to look at their financing arrangements as many are likely to have been delaying this decision until after the announcement. However, there may be limited options available, and this could lead to more discussions around restructuring options for businesses seeking alternatives to a fresh injection of funds.

“Of these, Restructuring Plans remain an option sought by a range of businesses across the UK, and the profession is continuing to search for a means of making them accessible to SMEs. Some of the most recent case law would suggest progress is being made, which is positive news given current levels of corporate insolvency and the challenges faced by the business community.

“Turning to personal insolvencies, while overall numbers are lower than last month, they are significantly higher than they were this time last year. The key driver of this is an increase in the number of people entering a Debt Relief Order as result of changes in the thresholds and the removal of the entry fee for this process.

“The personal insolvency and Breathing Space figures illustrate what we’ve been hearing in the market: household finances in England and Wales remain stretched and financial and economic worries are a reality for many consumers. Right now, people are tightly watching their everyday expenses and cutting back their spending wherever they can, and with the energy price cap expected to rise in the winter months, this behaviour in unlikely to change and these worries are unlikely to abate until at least the end of the year.

“We urge consumers and directors to remain vigilant about their finances and seek advice as soon as they become concerned or spot any signs of financial distress. Most R3 members will give prospective clients a free consultation to learn more about their circumstances – and taking up that option when your worries are at an early stage will give you more potential solutions than if you’d waited until the problem became more severe.”