Compulsory liquidations at highest monthly level for over three years
The first month of the new financial year 2025/26 has arrived and brings some sobering news for directors and business owners as corporate insolvencies are up overall and in almost every underlying category too.
The corporate insolvency figures for April have been released by The Insolvency Service and show the monthly total for England and Wales being 2,053.
This is a 3% increase from last month’s total of 1,922 but 5% lower than the monthly total from a year ago.
Analysis
Of the 2,053 corporate insolvencies recorded in April, the most frequently recorded type were Creditors’ Voluntary Liquidations (CVLs) with 1,544.
This is a very small increase on the previous month’s total with one more case logged and is actually 10% lower than the same period 12 months ago.
CVLs make up 75% of all corporate insolvencies recorded in April, a decrease of 2% from the ratio recorded in March.
There were a total of 379 compulsory liquidations recorded in April. This was an increase of 24% from the previous month and a 33% increase from the same month a year ago. This was also the highest monthly total of compulsory liquidations recorded in three years.
Last year saw compulsory liquidations at their highest levels for a decade with huge growth from their record low levels seen in 2020 and 2021 when restrictions were applied on the use of statutory demands and winding-up petitions (which lead to compulsory liquidations).
HMRC are continuing to crack down on companies with corporation tax, VAT, PAYE and National Insurance (NICs) arrears, with more resources being allocated to them and more staff being recruited to investigate and take action.
This will see the continued use of statutory demands and winding up petitions which will continue to keep the number of compulsory liquidations high.
There were 105 administrations in April which was a 20% decrease on March’s total and a 30% decrease from the same month a year ago. Administrations have now recovered to their previous pre-pandemic levels after falling to 18-year lows during the Covid affected year of 2020.
24 Company Voluntary Arrangements (CVAs) were recorded in April which was a 41% increase on last month’s total and a 33% increase from April 2024.
CVAs had recovered to approximately half of their pre-Covid levels with headroom to expand even further, which they did last month.
Administrations and CVAs are attractive for several reasons to directors because of the additional options and legal protections they bring that enable them to not only reduce outstanding debts but restructure their business and finances rather than look to go straight to liquidation.
There was one receivership appointment made in April which was the first one seen this year. Additionally there was one restructuring plan and one insolvency moratorium recorded as well.
Since June 2020, 61 companies have obtained insolvency moratoriums to successfully pause legal action from their creditors while they financially restructure while a further 37 had their restructuring plans registered at Companies House as required under the Corporate Insolvency and Governance Act 2020.
According to the monthly rolling data taken from the Companies House register, one in 190 companies (at a rate of 52.5 per 10,000) entered insolvency between 1 May 2024 and 30 April 2025. This was a slight decrease from the previous rolling 12 month total.
The Insolvency Service produces these 12-month rolling rates calculated as a proportion of the total number of active companies which they say highlights longer term trends and is designed to “tune out” any one-off or monthly volatility.
Scotland
In Scotland last month there were 101 company insolvencies; a 7% decrease on the total from a year ago and 17 fewer cases recorded than a month previously.
March was the joint highest monthly total in the previous 12 months and April was the third month in succession when Scottish insolvencies totaled over 100.
April’s total was made up of 47 CVLs (down from 55); 51 compulsory liquidations (down from 57) and three administrations (down from six). There were no CVAs or receivership appointments recorded.
Scotland’s insolvency regime is partly devolved. The Accountant in Bankruptcy (AiB), Scotland’s insolvency service, administers the Register of Insolvencies which is a publicly accessible statutory register regarding the insolvency of individuals and businesses in Scotland including company liquidations and receiverships.
Between June 26th 2020 and April 30th 2025, there were three restructuring plans and one moratorium in Scotland. Both of these procedures were created by the Corporate Insolvency and Governance Act 2020.
Traditionally Scotland has seen more compulsory liquidations than any other kind of insolvency process but CVLs overtook them in April 2020 and had remained higher ever since until this month – the first month the positions had reverted.
Many Scottish directors and their accountants are continuing to take difficult decisions early enough to give them control of key elements of an insolvency process.
Many creditors are beginning to take action and force the closure of their creditors to force sales of their assets to recoup arrears.
The company insolvency rate in Scotland in the 12 months to April 2025 was 51.2 per 10,000 companies on the effective register. This was down by 1.5 from the preceding 12 months ending April 2024.
Northern Ireland
In April there were 30 company insolvencies in Northern Ireland. This was one more than a month ago and 9% fewer than the same period a year ago.
The total number of company insolvencies was comprised of 14 compulsory liquidations (up from nine); 11 CVLs (done from 12); three CVAs (up from two) and two administrations (down from six). There were no receivership appointments.
There was one moratorium recorded in Northern Ireland between June 26th 2020 and April 30th 2025 and no restructuring plans.
The total insolvency rate in the 12 months to April 2025 in Northern Ireland was 35.3 per 10,000 companies on the effective register. This is a decrease of 1.3 from the 12 months to April 2024.
The total number of company insolvencies for the whole of the UK in April 2025 was 2,184 – a monthly increase of 45.
Tom Russell, Vice President of R3, the UK’s insolvency and restructuring trade body said: “April’s corporate insolvency figures were the highest we have seen since July 2024.
“Creditors’ Voluntary Liquidations remain the process companies most commonly enter into – and their consistently high numbers reflect the ongoing challenges, high costs and political and economic uncertainty businesses face – and the toll these are taking on their finances and their confidence in their ability to turn their situation around.
“Compulsory liquidations have also hit the highest level in more than five years as creditors chase down unpaid debts in an attempt to meet their own payment deadlines – led by the HMRC as the Government attempts to balance the national books.
“Increasing costs and uncertainty are continuing to drive corporate insolvencies. April saw the introduction of the new rates for Employers’ National Insurance Contributions and Minimum Wage, which have increased overheads for businesses at an already challenging time.
“Many businesses will already have increased prices and cut expenditure to cope with the existing economic challenges and many, especially SMEs, will find it increasingly difficult to respond to further cost increases.
“It is unlikely that we will see the full impact this will have on businesses until later in the year, but the prospect of these changes being introduced has influenced a number of directors’ decisions to seek insolvency and restructuring advice and consider the future of their businesses.
“The recent increase in unemployment indicates that the tax increases along with the prospect of the Employment Rights Bill coming into law, has also affected hiring levels and investment as management teams wait to see how it will affect their wage bills and we expect this to continue until the picture is clearer.
“Alongside this, businesses have faced the impact of the introduction of the US tariffs. While some of the outcomes from the President and Prime Minister’s recent announcement will be a relief to businesses in a range of sectors, a number of the details of the tariffs still need to be confirmed, and there is no denying their introduction will make it more expensive to export to America.
“The uncertainty and unpredictability around US tariff policy generally is also likely to affect costs, growth and investment as both business owners and lenders will look at how the tariffs will affect revenue and profits and may choose to change their plans, review or withdraw their funding once these have been considered.
“Looking across the economy, the sectoral picture is a mixed one.
“Construction continues to be affected by ongoing issues with the price of materials, payment and client hesitancy about commissioning new work, while the care sector is trying to navigate how it will manage the Government’s proposals to end overseas recruitment for social care visas.
“On a more positive note, retailers have benefited from the late Easter and improved weather, which has led to an increase in sales and hospitality has also seen a rise in activity and spending levels. However, there is no escaping the fact that all of these sectors will be seriously affected by the changes to National Insurance and Minimum Wage, which will put a further squeeze on margins and increase costs and could lead to more businesses becoming financially distressed.
While overall corporate insolvency numbers climbing is a cause for concern, the underlying data on increasing CVAs and compulsory liquidations means that directors are split about the best course of action for their businesses to take.
Some are acting to secure their future by reaching a repayment deal with their creditors which sees a large proportion of debt written off in exchange for regular, monthly repayments on the remainder.
Others are ignoring the problem or don’t realise how serious the situation is so HMRC and other creditors are using winding-up petitions and CCJs to force them into liquidation so their assets will be sold off to repay them.
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