UK business failures: surge in voluntary liquidations signals need for early intervention
Recent insolvency figures reveal a stark warning about the cost of inaction for directors and business owners, says a leading UK insolvency practitioner.
Figures for February 2025 show a 2.9% increase in registered company insolvencies in the UK, comprising 393 compulsory liquidations; 1,520 creditors’ voluntary liquidations (CVLs); 115 administrations; and 7 company voluntary arrangements (CVAs).
In 2024, there were 23,872 insolvencies in total. While this marked a slight decline from peak of 25,158 in 2023 – the highest since 1993 – the numbers tell a concerning story. Voluntary liquidations accounted for over 18,000 cases, suggesting many businesses are shutting down rather than seeking recovery routes.
“It’s notable how many businesses are opting for voluntary liquidation, which typically means the business ceases trading entirely. This contrasts with administrations or CVAs, which can offer a lifeline to preserve jobs and protect creditor interests,” said Robert Young, partner in the UK Restructuring & Insolvency team at international business advisory group Azets.
He warns that businesses are increasingly vulnerable to rapid shifts in global and domestic conditions: “Gone are the days when UK business owners could afford to focus solely inward. Geopolitical volatility, regulatory changes, and domestic fiscal policies all have a direct impact – often overnight. We’ve seen incredible resilience over recent years, but many businesses are understandably operating in survival mode.”
In a recent survey carried out by Azets, 46% of businesses reported expecting stronger performance in 2025. However, only a third planned to increase headcount, and forecast capital expenditure dropped sharply – from 47% in 2023 to just 28% this year. Coupled with the fact that 75% of businesses anticipate rising operating costs, the findings reflect a cautious approach as many businesses focus on consolidation over expansion.
Robert says a key concern is that directors may delay action until it’s too late. He emphasises the legal and financial risks for directors who fail to engage early: “What we consistently see is that the earlier advice is sought, the more options are available – whether that’s restructuring debt, securing fresh funding, or pursuing formal rescue mechanisms,” he added, “If businesses enter the ‘zone of insolvency’, directors must be aware of their statutory duties. Failing to act on financial warning signs can lead to personal liability or even disqualification.
“I encourage business leaders to maintain up-to-date financial information, engage regularly with stakeholders, and take early professional advice – before cash pressures limit their options.”