Analysing August’s corporate insolvency stats

In August 2025, there were 2,048 registered company insolvencies recorded by the Insolvency Service, a 6% increase on August 2024, but a 2% decrease on July 2025. So far in 2025, the month-by-month totals are slightly higher than 2024 and similar to the 30-year high of 2023.

The main driver of the monthly fall in corporate insolvencies has been a reduction in the number of compulsory liquidations and administrations. August’s higher insolvency numbers versus last year reflects the continued pressure businesses are under.  

Companies are under pressure to cut costs wherever they can, but they’ve been having to do that since the end of the pandemic. Since late 2021, firms have had to deal with increased creditor pressure, Covid debt repayments, customers cutting back spending, increased inflation, rising prices for materials and goods, a more aggressive approach to debt recovery from HMRC, and a rising burden from taxes.  

All of these have increased costs and led to significantly higher levels of corporate insolvencies compared to pre-pandemic figures. Given the ongoing issues businesses face with costs and shrinking margins, changes in UK tax policy making it more expensive to recruit and retain staff, national economic and geopolitical issues, and high interest rates affecting borrowing and debt, the business climate remains stormy.  

It would be no surprise, given this and the increase in requests for advice and support the market has seen recently, if insolvency numbers rose compared to last year and in the coming months.

Our SME clients are showing remarkable resilience in a challenging market, despite the latest statistics and the current national and global political and economic issues making it hard to be optimistic about the short-term prospects for the wider SME community.   

The positive news is that there is still capital available to invest in UK businesses but management teams who want to use this as a lifeline need to do so while the business is still investable, and engage with lenders as early as possible.

The Government is aware of the challenging business climate and the impact it’s having on the business community. They will need to walk a difficult line between balancing the books and putting businesses under further financial pressure at the Budget in November, and hopefully they will be able to find means of achieving the former without creating the latter.  

While it’s disappointing that access to the Restructuring Plan has been limited for SMEs, the reality is that the costs associated with meeting the high standard of analysis the courts require from those looking to enter this process make it hard for smaller businesses to enter one.  

There is a wealth of alternative options available for firms of this size, with a Company Voluntary Arrangement (CVA) remaining accessible to those insolvent SMEs who have the potential to be rescued and returned to profitability. Hopefully a mechanism can be found to reward those creditors who are forced to accept CVA proposals from the new levels of enterprise value created by the process.

The market remains tough, but the key action any director or management team of a struggling business can take is to seek advice at the earliest possible time. Whilst it is a difficult conversation to have, starting it when a business first shows signs of financial distress gives the firm more options, a better chance of securing rescue finance, and a greater likelihood of improving its situation than if its management team had waited till the things had become more serious.

Get in touch with a member of our specialist restructuring team today to discuss your position.