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According to data from the Insolvency Service, corporate filings in the UK have surged. In April 2024, there were 1,715 filings, marking a 25.4% jump from April 2023. If we look at the year-long period ending in April 2024, filings have totalled 20,467, showing an 8.9% rise from the previous year.
The above chart delves deeper into the specific formal insolvency events. Creditors’ Voluntary Liquidations, commonly referred to as CVLs are the most common insolvency event. CVLs have increased with 1,234 filings in April 2024. This equates to a 22.3% increase year-on-year. Looking at these statistics, it is reasonable to consider that more companies are choosing the proactive method to wind-down their operations voluntarily.
Despite CVLs being the most common type of filing, the largest increase was seen in Compulsory Liquidations, which rose by 63.9% compared to April 2023. This suggests a significant rise in court-ordered company closures, likely driven by creditors’ petitions. Additionally, the number of administrations, a process aimed at rescuing struggling businesses, went up by 12.2%. On the other, more positive hand, there was a slight decline in Receiverships, which sees an independent party being appointed to manage a company’s assets
In April 2024, the construction industry in England and Wales faced significant challenges, with construction firms making up 17.3% of all insolvencies, totalling 399 businesses.
One key factor contributing to the difficulties in the construction sector is the fluctuating prices of essential building materials, which has put additional strain on businesses. Access your free construction debt management guide here for more information.
The sharp rise in prices for materials like pipes, fittings, and structural steel has squeezed profit margins and made financial management more challenging for construction businesses. In April 2024, construction material prices showed mixed trends. Prices for items such as flexible pipes and fittings, metal doors and windows, and fabricated structural steel increased by 11.3%. Conversely, prices for gravel, sand, clays, kaolin (including aggregate levy), and concrete reinforcing bars dropped by 18.0%.
Overall, construction companies appear to be at greater risk of financial difficulties compared to other industries. Another contributing factor may be the unique structure of construction contracts, which makes cash flow management particularly difficult for contractors and subcontractors.
At Bell & Company, we closely monitor all and any financial trends to be fully abreast of the economic landscape. This enables us to provide the most current and informed advice for our clients’, from the initial case review right through to successful resolution.
Our website features a wide range of free, relevant articles, regularly updated with new sector information. We also offer a free initial case review, get in touch today by calling 0333 305 4331 or email us at [email protected].
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