As Insolvency Practitioners, we believe one of our strengths is what we call our ‘bedside manner’, in other words, how we deliver a caring and bespoke personal service to directors whose businesses are facing financial difficulties. Part of this is keeping up to speed with what’s going on with businesses that are struggling to better understand what challenges businesses face, as well as all the changes in insolvency law and practice (that’s a given), and how we make sure directors have the best possible advice for them and their business.
We have noticed for some time that directors are delaying the decision to take formal action in relation to their business, even though costs are rising, interest rates and creditor actions are keeping the pressure at an all-time high. Meanwhile, practice-critical changes have happened leading to HMRC’s different practice to solvent Liquidations (Members’ Voluntary Liquidation (MVL)). Company Voluntary Arrangements (CVA) are showing a slight year-on-year decline, whilst Administrations remain the tool for complex restructurings, with Thames Water’s contingencies a reminder to track Special Administration Risks.
In this article, we set out the latest trends in UK insolvency and company rescue in 2025, then translate them into key actions for Insolvency Practitioners and company directors.
What are the current trends in UK insolvency and company rescue procedures?
Creditors’ Voluntary Liquidations (CVLs): still the most common route
CVLs continue to dominate the insolvency landscape. According to the Insolvency Service’s latest monthly figures, CVLs made up around 78% of all corporate insolvencies in June 2025. That’s consistent with what we’ve seen over the past year: with directors often delaying taking action, hoping for a turnaround that often doesn’t materialise, before entering into a CVL where the chance for any meaningful recovery has gone.
The Insolvency Service’s own research shows that in most CVLs, unsecured creditors receive nothing – and in many cases, the costs of the liquidation exceed the value of the assets. You can read their analysis here.
Members’ Voluntary Liquidations (MVLs): faster, but stricter
HMRC has changed how MVLs are handled. Tax clearance is no longer part of how HMRC process liquidations. Instead, directors and Insolvency Practitioners must try to ensure that all tax returns are filed through the usual channels before the appointment – and allow time for HMRC to process them before closing the liquidation.
This can speed things up, but only if everything is in order from the start. If HMRC hasn’t submitted a claim, a Notice of Intended Dividend will be issued to give them a final chance to claim.
In addition, in a recent case in the High Court has reaffirmed the strictness of the MVL 12-month payment test. If all debts – including disputed or contingent ones, with interest – cannot be paid within the period specified on the Declaration of Solvency (which can be no more than 12 months), the MVL must convert to a CVL.
Company Voluntary Arrangements (CVAs): still viable, tighter criteria
CVAs are still used as an effective turnaround procedure, but HMRC has tightened its voting criteria – requiring full disclosure, credible cash flow forecasts, and proper treatment of secondary preferential debts. You can read their guidance here.
Landlords and trade creditors are also more cautious, especially in sectors like retail and hospitality. That means proposals need to be watertight – and directors need to understand that a CVA isn’t a quick fix.
Administrations: still the go-to for complex restructurings
Administration remains the formal route for larger restructurings, business sales, and moratorium protection. Appointments are steady across sectors – construction, property, retail and tech, for example – and the framework is well established.
One case to watch is Thames Water. The government has contingency plans in place for a possible special administration regime, which applies to essential services. It’s not a sign of imminent collapse, but it’s a reminder that directors in regulated sectors need to understand how special regimes work.
What should directors be doing now?
In light of the above changes, here are a few things directors (with help and advice from Insolvency Practitioners as necessary) should be doing:
Tighten MVL onboarding and close-down process
- File all returns before appointment: Don’t rely on HMRC clearance – it’s no longer part of the process.
- Use NOIDs (Notice of Intended Dividend) properly: If HMRC hasn’t proved, issuing a NOID gives them a final chance to claim and will validate any subsequent dividends to shareholders.
- Allow time for processing: HMRC needs time to deal with returns and repayments – don’t rush closures.
- Document solvency with interest: Make sure all debts, including statutory interest, will be paid within 12 months – and keep clear working papers.
Insolvency Practitioners advise directors clearly on the MVL 12-month test
- Explain the rule up front: If all debts – including contingent ones – cannot be paid within 12 months, the MVL must convert to a CVL.
- Don’t delay adjudication: Waiting too long to resolve disputes or cross-border claims can breach the test.
- Get legal advice early: If there is any doubt, directors should seek advice before signing the declaration of solvency.
The main take away point here is that Insolvency Practitioners should be engaged far sooner than they have been traditionally. Nobody wants to throw the towel in too soon if there’s a chance of the position being reversed. However, what should be remembered is that Insolvency Practitioners are perfectly positioned to offer advice, given their unique role where they see the difficulties businesses face on a daily basis. It should be remembered, not all advice will lead to an insolvency appointment being recommended.
Final Comment on UK insolvency and company rescue in 2025
The Insolvency regime in the UK is constantly evolving. In order for directors to remain informed, up to date and proactive, they will need the assistance of Insolvency Practitioners who will help them navigate this ever-evolving landscape.
