What happens when a business becomes insolvent?

A company is considered insolvent when it cannot pay its debts as they fall due, typically leading to liquidation. Once a company is determined to be insolvent, the directors have a legal duty to act in the best interests of the creditors and take steps to minimise further losses. This process might include ceasing trading, seeking professional advice from an insolvency practitioner, or entering a formal insolvency process such as liquidation.

Actions following insolvency:

1. Compulsory liquidation, which occurs following a winding up petition given by the court.
2. CVL (creditors’ voluntary liquidation), actioned by directors when they recognise the company is insolvent.
3. Administration, where the Administrator (usually an insolvency practitioner) has the objective of rescuing the company and recovering as much as possible for the creditors.
4. CVA (company voluntary arrangement), an insolvency procedure where a company has an arrangement with its creditors to pay the debts in the future, which prevents these creditors from taking action against the company in the present.

August 2026

In August 2026, there were 1946 insolvencies, a 0.78% increase to the previous month and decrease of 3.42% from the previous year.

These insolvencies included:

• 314 Compulsory Liquidations – an increase of 3.28%from the previous year.
• 1431 CVLs – a decrease of 9.2% from the previous year.
• 182 Administrations – an increase of 52.9% from the previous year.
• 19 CVAs – an increase of 18.75% from the previous year.

Past 3 Months Total 2026

Insolvencies by month since 2000

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