ICSM Insolvency News in Brief: Administrations are up as Creditor Voluntary Liquidations increase in popularity - while Thames Water clings on with another loan

By Harry Mottram: With the news filled with talk of Trump’s tariffs it is no surprise that there is concern in businesses that rely on exporting to the USA. Since the new president took office in the Whitehouse things certainly have been shook up – with the law of unexpected consequences seeing a large drop in sales of Tesla cars due to the antics of Elon Musk. Whether the owner of X’s other business interest will also be hit it remains to be seen. One thing is true on either side of the Atlantic and that is the continued problem of inflation and the ongoing Cost of Living Crisis. A crisis that is hitting business as the increase in company insolvencies indicates.

January Insolvencies

2025 has begun as 2024 ended – on a low. Figures for January show the number of insolvent companies were up by 6% from December and a worryingly high 12% year on year - no doubt not helped by the last budget and for years of sluggish growth of which both Governments have presided over. And Creditor Voluntary Liquidations are now higher than pre-Covid levels which doesn’t bode well although compulsory administrations are down.

CVLs make up 78% of January’s insolvencies and have increased as a proportion over the years as they can be a cheaper form of liquidation compared to going through the Official Receiver with a compulsory liquidation. Writing for Business Matters Jamie Young quoted Stephen Hunt of insolvency firm Griffins as saying: “CVLs are often sold by unqualified salespeople to unsophisticated clients seeking cheap liquidation.” Jamie Young noted: “Fixed fees introduced in 2016 have made many insolvencies financially unviable for practitioners to investigate, raising concerns that significant tax and creditor debts are being written off without proper examination. Hunt urged the government to reintroduce percentage-based fees to ensure better scrutiny of liquidation cases.”

January 2025 saw 10% more administrations than December 2024 and 9% more than January 2024 following seasonal adjustment – so no good news there. Meanwhile Thames Water continues to hang on despite its debt mountain as the High Court approved its latest £3bn loan (in two lots of £1.5bn) just four weeks ahead of it going bust. Many believe it will collapse eventually, and the loan prevents the inevitable until later this year – when if the second part of the loan isn’t agreed then it could be nationalised and creditors and lenders won’t get a penny. It could technically be bought out – and there are rumours of other utilities being interested – but they would not be keen on taking on the debts as well as the business itself.

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