Years of challenging trading conditions and the threat of April’s rise in the National Minimum Wage and Employers’ National Insurance Contributions have driven up monthly corporate insolvency figures to the highest seen in January for more than five years.
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 [18/2/25] by the Insolvency Service which show that corporate insolvencies increased by 6.4% last month to a total of 1,971 compared to December 2024’s total of 1,852.
The January 2025 figures are also 10.7% higher than the January 2024 total of 1,780 and they are 13.1% above the 1,743 registered in January 2023.
R3 Midlands Chair Stephen Rome, a partner at law firm Penningtons Manches Cooper in the region, said: “The monthly rise in corporate insolvencies is due to an increase in the number of Creditors’ Voluntary Liquidations and Administrations. Creditor pressures, ongoing cost issues and consumers’ reluctance to spend is continuing to take a toll on businesses.
“Creditors have now largely abandoned the benign attitude they had in the aftermath of the pandemic as they attempt to manage their own debts. We’ve also seen HMRC return to its pre-pandemic approach of pursuing money it’s owed – this is after years of taking a more supportive stance during and after the COVID era.
“There is, however, some positive news in all of this in the form of the rise in Administration numbers. They are higher than both this time last month and this time last year, indicating that there are more companies which have the potential to be rescued through a sale out of Administration, helping to maximise creditor returns and safeguard jobs.
“Against this backdrop, I would expect to see an increase in demand for restructuring advice and support across the region, as firms consider their options ahead of the end of the financial year, particularly as cost and creditor pressures are unlikely to ease in the short-term.
“R3’s message, therefore, is for anyone who is worried about finances to seek advice as soon as possible. We’ve seen countless examples of businesses reaching out too late and which could have achieved a more positive outcome if they had acted sooner.
“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.”
