creditcontrol.co.uk
Static statistics before the insolvency storm
Inflation isn’t just sticky, it’s rising and has yet to peak. Growth is turgid. Unemployment is rising and vacancies are falling not because they’re being filled, but due to job opportunities being withdrawn. Industry bodies are complaining and demanding government action and support. Business and consumer confidence survey results are all over the place, but the consensus is negative.
So why are corporate insolvencies stuck in the doldrums? We asked Nick Hood, Senior Adviser at Opus Business Advisory Group to read the business tea leaves to come up with an explanation.
The latest numbers
“Individual monthly figures for business failures have been inconsistent for some time. The totals have alternated between a rise and a fall every month since October 2024. On a non seasonally-adjusted basis for the whole UK, there were 2,308 corporate insolvencies in July 2025. This was up by a marginal 1% compared to July 2024 and 5% higher than in June 2025. Looking much further back, the current figure is 44% higher than pre-pandemic in February 2020.
The more meaningful rolling 12 -month total for July 2025 was 25,395. This is 6% down on a year previously and 7% down on the all-time high in February 2024. So, we are below the dog days of economic chaos at the end of the last government, although not by that much.”
The underlying trends
“Looking into the detail, the move away from business rescue through the Administration process continues, while creditor enforcement is growing rapidly. Over 16% (17%) of July 2025’s failures were Compulsory Liquidations compared to 14% in July 2024. Only 6% of insolvencies were Administrations, just as they were in July 2024. They were 11% immediately pre-pandemic.”
The surge in Pre-Pack Administrations
“Few could dispute that Pre-Packs are controversial, with the business and assets of an insolvent Company being whisked away the moment the Administrators are appointed, sometimes sold back to the owners or Directors of the failed firm. No creditor will ever be persuaded that there isn’t something inherently suspicious about this, no matter how much transparency and how many safeguards are put in place.
Whatever the rights and perceived wrongs of this process, its use is rising. Back in 2021, Pre-Packs represented 25% of all Administrations that year. The latest data from the Insolvency Service confirms that in 2024, there were 624 Pre-Packs out of 1,597 Administrations, equivalent to 39%.
More than half of Pre-Pack sales are back to connected parties (59% in 2023), a statistic that undoubtedly fuels negative perceptions of the process held by unsecured creditors, who feel disenfranchised and oppressed by its use.
The increasing dominance of Pre-Packs may be down to an increasingly restrictive attitude of the Courts to approving the recovery of costs incurred by Administrators, as well as the changed business lending market where funders are far less willing to risk pouring money into a potential business rescue ‘black hole’.”
When the storm breaks, will it start in Hospitality?
“With such a weak economic background, there is a very real risk that business insolvencies will accelerate. The timing is hard to predict, but hospitality looks highly likely to be where the first surge will happen.
Hotels, pubs, bars and restaurants have long been major contributors to the overall insolvency statistics. In the 12 months to June 2025, they accounted for 14% of all failures. Now the sector is being battered by three hugely negative factors:
• cost of living pressures cutting customer spend;
• significant cost increases in the 2024 Autumn Budget; and
• implications of the Employment Rights Bill.
The latest quarterly survey published by the trade body, UKHospitality highlight the tangible impacts already of these issues:
• over two thirds of respondents are now having to operate at or below 85% of their minimum required capacity;
• almost three quarters have less than sx months’ cash reserves and a fifth have none at all;
• 79% have been forced to increase prices; and
• more than half have cut staff.
Job losses in restaurants, bars, pubs and hotels total around 89,000 since October 2024, according to UKHospitality analysis of Office for National Statistics data. This equates to 53% of all UK job losses since the Chancellor’s Autumn Budget and means that 4.1% of all hospitality jobs have been shed in just nine months.”
What next for insolvencies?
“The die for higher business failure levels was surely cast almost a year ago in the last Autumn Budget, which raised costs for some significant sectors beyond the capacity of many financial models to cope. The subsequent sluggish economic performance, combined with speculation about public finances and nervous anticipation of seemingly inevitable tax increases in the next Budget have punted desperately needed business investment deep into the long grass of uncertainty. This has done nothing to dispel the risk of increased insolvencies.”