Insolvency News & Commentary

UK company insolvencies are running at their highest sustained level since the early 2000s. The Insolvency Service‘s quarterly statistics for Q1 2024 recorded 5,209 company insolvencies, of which roughly 88% were Creditors’ Voluntary Liquidations.

Behind that headline figure sit four trends that change how you should think about your own position. HMRC’s reinstatement as a secondary preferential creditor in December 2020 has shrunk floating-charge recoveries.

The Supreme Court’s BTI v Sequana decision in 2022 settled when directors must start weighing creditors’ interests: when the company is insolvent or bordering on insolvency, or an insolvent liquidation or administration is probable.

The construction-hospitality-retail sector cascade is still building, and the BHS Group judgments showed that claims against former directors for wrongful trading and misfeasance can end in orders worth millions per director.

This is the page where we synthesise the trends, the sector data, the regulatory shifts, and the case-law developments that change director exposure in real terms. Not news for news’s sake; news that signals where action is needed, and where it isn’t.

Insolvency News and Commentary at a Glance

This hub aggregates four streams of intelligence:

• Statistical trends from the Insolvency Service quarterly publication and commercial credit reference agencies
• Sector analysis identifying where insolvency rates are rising fastest and why
• Regulatory updates; CIGA 2020 operation, FA 2020 changes, the 2021 Act, and the 2021 Regulations on connected-party pre-packs
• Case-law commentary on the decisions reshaping director-liability framework, especially BTI v Sequana, Re Virgin Atlantic, and the BHS Group judgment

The “trend signal vs noise” framing matters. Directors need pattern context, not just isolated statistics. A 23% year-on-year increase in construction insolvencies is one statistic; the implication that subcontractor chains in your sector are at heightened risk is what you can act on.

Key Insolvency News Trends: What the Statistics Are Saying

Volume: Q1 2024 recorded 5,209 company insolvencies; the highest quarterly figure since 2003. The 12-month rolling rate sits at approximately 20,000 company insolvencies per year, materially above the pre-pandemic baseline of 14,000-15,000.

Procedure split: CVL remains the dominant route at approximately 88% of all company insolvencies. Administrations make up roughly 6%, compulsory liquidations around 5%, and CVAs the remaining 1%.

The CVA share has fallen since 2020; partly because HMRC’s secondary preferential status makes the 75% by value approval threshold harder to reach, and partly because the Restructuring Plan under Part 26A CA 2006 has absorbed some of the complex restructuring volume.

HMRC effect: The Finance Act 2020 reinstated HMRC as a secondary preferential creditor for trust taxes (VAT, PAYE, employee NIC, CIS) with effect from 1 December 2020.

The Insolvency Service has not published direct creditor-recovery data, but practitioner consensus is that SME bank recovery rates on floating charges have fallen by 10-30 percentage points where significant trust-tax balances exist.

Director Redundancy claims: A director can claim redundancy pay from the Redundancy Payments Service only if they were also an employee of the company under a contract of employment, and the service checks this. Many directors do not qualify, so it is not a dependable way to pay for a liquidation.

Insolvency News by Sector: Failure Cascades and Risk Concentration

Four sectors deserve close attention in 2024-25:

Construction. Highest insolvency volume by sector since 2022. The cascade pattern; main contractor failure triggering subcontractor non-payment + supplier credit withdrawal; runs through chains that can include 200+ businesses. Carillion remains the case study; the modern version plays out at lower-profile mid-market scale every quarter.

Hospitality + retail. The pandemic created a 2-year working-capital hole that the cost-of-living crisis has compounded. Business rates revaluation effects (the 2023 list valuations are still being challenged) compound input-cost inflation. The Q1 2024 retail insolvency rate was 18% above the 5-year average.

Manufacturing. Customer payment terms have extended materially since 2022; 60-90 days is now common where 30-45 was the historic norm. Combined with input-cost inflation, this has squeezed working capital across the sector. Invoice finance has grown rapidly in response, but at the cost of recurring 2-4% fees that eat margin.

Care homes. Regulatory pressure (CQC enforcement + workforce shortages) combined with local-authority commissioning delays has created a sustained insolvency pattern. Specialist administrators (BDO, Begbies Traynor, Quantuma) have built care-home practices around the recurring volume.

If your business sits in one of these sectors, the insolvency intelligence is operational for you. Your counterparty risk needs active monitoring. Your customer concentration above 30% becomes a single-point-of-failure exposure. And the rescue procedures (CIGA Part A1 moratorium, CVA, Restructuring Plan) should be familiar to you before you need them.

Insolvency News: Regulatory Changes and Compliance Signals

Three regulatory layers shape the current framework:

CIGA 2020. The Corporate Insolvency and Governance Act 2020 introduced Part A1 of the Insolvency Act 1986 (standalone moratorium) and Part 26A of the Companies Act 2006 (Restructuring Plan with cross-class cram-down).

The standalone moratorium gives 20 business days breathing space (extendable) under monitor (licensed IP) supervision. The Restructuring Plan absorbs complex SME/mid-market restructurings that would previously have gone through Scheme of Arrangement or administration.

2021 Regulations. The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, in force from 30 April 2021, mean that an administrator cannot sell all or a substantial part of the business to a connected party in the first 8 weeks of the administration unless creditors approve it or an independent evaluator reports on it.

SIP 16 was updated to reflect the new requirement.

The Pre-Pack Pool (voluntary review service since 2015) was superseded by the statutory evaluator framework.

2021 Act. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 gave the Insolvency Service power to investigate the directors of dissolved companies without first restoring the company.

A disqualification application must normally be made within 3 years of dissolution, but the court can allow a later one. The BBL Audit Programme has used this route to investigate ~1,500 directors and produce disqualifications.

These three layers operate together. A director considering pre-pack administration needs the 2021 Regulations framework. A director considering strike-off with debts outstanding needs the 2021 Act exposure framework. A director considering CVA needs the CIGA 2020 alternatives (Part A1 moratorium + Restructuring Plan) on the table.

Insolvency News: Case Law Shaping Director Exposure

Three court decisions matter:

BTI 2014 LLC v Sequana SA [2022] UKSC 25. The Supreme Court confirmed the creditor-duty doctrine first established in West Mercia Safetywear v Dodd [1988] BCLC 250. The duty engages when the company is insolvent or bordering on insolvency, or when an insolvent liquidation or administration is probable. It does not wait until liquidation is unavoidable.

The Sequana facts involved a dividend paid 9 years before the company’s eventual insolvency, and the court considered whether the duty had been engaged at that date. The court held that the duty had not been engaged when the dividend was paid: a real risk of insolvency, on its own, is not enough.

Re Virgin Atlantic Airways Ltd [2020] EWHC 2376 (Ch). First UK Restructuring Plan under Part 26A CA 2006 / CIGA 2020.

Every creditor class approved that plan, so it did not use cross-class cram-down.

That came first in Re DeepOcean I UK Ltd [2021]: a dissenting class can be bound if it is no worse off than in the relevant alternative and a class with a genuine economic interest has voted for the plan. The court still decides whether to sanction it. Re Smile Telecoms developed the jurisprudence further on disclosure requirements and class composition.

BHS Group case (2024). Joint liquidators of BHS Group pursued former directors for wrongful trading, misfeasance and breach of duty. In Wright v Chappell [2024] EWHC 1417 (Ch) the court ordered Lennart Henningson and Dominic Chandler to contribute £6.5m each for wrongful trading, plus further sums for particular payments.

Later in 2024 the court ordered Dominic Chappell to contribute £21.5m for wrongful trading. A further judgment ([2024] EWHC 2166 (Ch)) held Chappell and Henningson jointly and severally liable for £110.23m in compensation for breaches of duty that kept the companies trading when they should have gone into administration.

The orders show that even where the company’s recoverable assets are limited, the directors’ personal contribution-order exposure can run into millions.

Practitioner takeaways:

• Sequana creditor duty = once the company is insolvent, bordering on insolvency or heading for a probable insolvent liquidation or administration, directors must weigh creditors’ interests, and should keep a written record of their decisions
• Restructuring Plan availability = mid-market complex restructures have a viable route that did not exist before 2020
• BHS Group: wrongful trading is not theoretical; individual directors were ordered to contribute between £6.5m and £21.5m

Your Next Step

If you are monitoring insolvency trends as commercial intelligence rather than crisis triage:

1. Track Insolvency Service quarterly statistics. Published 30-45 days after quarter-end at gov.uk/government/collections/insolvency-service-official-statistics. Headline numbers + sector breakdowns + regional patterns.
2. Sector-specific intelligence. Industry-body reports, trade-press analysis, commercial credit reference agency data (D&B, Experian, Creditsafe) for counterparty risk monitoring.
3. Regulatory updates. gov.uk’s Insolvency Service news page + Companies House service announcements track procedural changes.
4. Case-law commentary. Practitioner publications (Insolvency Lawyers’ Association journal, R3 commentary, Practical Law Insolvency module) for case-by-case implications.
5. Free initial call with one of our licensed insolvency practitioners if you have specific concerns about your company’s position.

For directors using this hub as crisis-triage signal: the news content tells you that you are not alone. The procedural routes (CVA, Restructuring Plan, administration, CVL) are well established, and a call with one of our licensed insolvency practitioners is the quickest way to find out which one applies to you.

Frequently Asked Questions About Insolvency News and Commentary