A monthly increase in compulsory liquidations – to their highest level in more than ten years – is indicating a toughening of the position towards debts owed by companies to the public sector, and the ongoing efforts of government to help balance their books.
This is according to the Midlands branch of the UK’s insolvency and restructuring trade body R3 and comes on the back of figures published this week [18/3/25] by the Insolvency Service which show that corporate insolvencies increased by 2.95% last month to a total of 2,035 compared to January’s total of 1,978.
The February figures include 393 compulsory liquidations, which is the highest monthly number since September 2014.
R3 Midlands Chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “Compulsory liquidations are often initiated by HM Revenue and Customs or local authorities as a measure of last resort, and the increase indicates that the public sector is now becoming much stricter with its debtors.
“This pattern of debt recovery is also being reflected more broadly across our region. High costs and cautious consumer and client spending mean creditors are being more aggressive about pursuing the money they are owed and aren’t afraid to turn to the courts to recover outstanding debts.
“At the same time, a large proportion of directors of insolvent businesses feel closure is the only option open to them after years of trading through tough conditions and with little hope of these improving in the short-term.
“With firms facing further hikes in expenses when National Insurance and National Minimum Wage rises are introduced in April, enquiries for restructuring and insolvency support are increasing as directors look to take specialist advice about their business finances.
“From a sectoral perspective, the region’s retail and hospitality firms are continuing to suffer as consumers cut back on their discretionary spending, while construction output has been affected by a fall in new work and poor weather, and manufacturing has continued to be impacted by cost and trade issues, which have hit demand and output levels.
“For any business owner worried about finances, R3’s message is to seek advice as soon as possible. Most R3 members will give prospective clients a free initial consultation to learn more about their situation and outline the potential options open to them to improve it.”
