As UK insolvencies hit a 30 year high - what lies ahead in 2024?

Quick read

Take a look at our summary below of some of the key R&I trends and developments to look out for in 2024.

Levels of corporate insolvencies
The most recent figures from the Insolvency Service show that the number of corporate insolvencies hit a 30 year high in 2023. The rise in insolvencies applies across all sectors with construction, retail and hospitality hardest hit. While inflation has come down, the overall macro-economic environment is showing few signs of improvement for businesses, suggesting this surge in insolvencies is yet to peak.
Use of restructuring plans
Since they were introduced in 2020, there have been 22 restructuring plans (RP) mainly for larger companies. The first Court of Appeal decision on an RP in Adler provided guidance on "fairness" in the context of the "cross-class cram down" mechanism and the need for parties to plan ahead and limit the issues (see our Alert). With creditor challenges and costs a significant issue, it remains to be seen whether a clear framework and a more streamlined approach will be enough to make the RP more accessible to mid-market companies in 2024.
Regulation of Insolvency Practitioners
The government plans to implement certain regulatory reforms including a new framework for the authorisation and regulation of firms offering insolvency services and a single public register of authorised IPs and firms. Legislation will be put in place as soon as Parliamentary time allows, possibly before the general election in 2024 (see our Alert).
Digital assets and English insolvency law
The UK Jurisdiction Taskforce will be issuing a legal statement in early 2024 following a consultation on the treatment of digital assets in English insolvency law. Its statement will no doubt provide persuasive guidance around the treatment of digital assets in the insolvent estate and related duties of parties in insolvency proceedings (see our Alert).
UNCITRAL model laws on insolvency
The government stated in July 2023 that it intends to legislate to implement the UNCITRAL Model Law on Enterprise Group Insolvency "as soon as possible", making the UK potentially one of the first countries to implement this tool to manage and coordinate insolvencies within corporate groups. The government will, however, consult further before implementing the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments.