The number of company bankruptcies increases by almost 20% in April

Challenging economic conditions led to an 18 percent increase in business failures in April, as rising debt, higher interest rates and budget cuts took their toll.

The number of company bankruptcies rose to 2,177 in April, up from 1,838 in March, according to data from Companies House. In the twelve months leading up to the end of April, the number of bankruptcies rose to 57 per 10,000 companies, compared to 52.6 per 10,000 the year before.

The current level of insolvencies remains significantly higher than during the pandemic and the 2014-2019 period. However, it is still below the peak of 113.1 bankruptcies per 10,000 businesses during the 2008-2009 recession.

The construction sector was particularly affected: 4,273 bankruptcies were reported in the twelve months to the end of March. This sector was responsible for about 17 percent of all bankruptcies as companies struggled with inflation and rising labor costs.

Kelly Boorman, national head of construction at RSM UK, noted that many construction companies are “still recovering from old contracts, which were purchased pre-Covid as fixed-fee contracts and are subject to litigation.”

Forced liquidations in April rose to 300, the highest since January 2019, as the country continues to battle rising debt levels.

Amid this rise in insolvencies, FRP Advisory, the restructuring group, has reported a favorable result. The London-based company expects its annual profit to rise to £37 million, with expected turnover of £128 million for the year ending in April, up 23 percent on the previous year.

FRP Advisory has been involved in high-profile restructuring cases including The Body Shop, Inland Homes and the parent company of Reader’s Digest. The company has expanded its market share from 14 percent in 2023 to 16 percent and has completed 76 transactions with a total deal value of £1.4 billion in the past year, up from £1.8 billion the year before.

As the economic landscape continues to pose challenges, the increase in business failures underlines the urgent need for companies to adapt and seek expert advice to navigate these turbulent times.