Rising insolvency in the UK reflect the financial uncertainty triggered by higher interest rates and the latest government budget. As businesses grapple with economic pressures, regional variations highlight areas of resilience amid widespread challenges.

According to the latest reports by R3, insolvency-related activity rose by 25.6% from September to October In Yorkshire and the Humber. This affected more than 300 businesses — 63 more than the previous month. Encouragingly, Yorkshire also saw a 7.9% increase in start-ups, with 4,570 new businesses launched. 

These dual challenges and opportunities reflect a mix of financial strain and entrepreneurial resilience across the UK. During such times, it is strongly advisable for struggling business owners to seek timely professional advice in order to avoid the threat of going under. 

Industrial Impact with rising insolvency levels

The Yorkshire and Humber region is characterised by its strong wholesale retail trade and manufacturing sectors. Yorkshire serves as a logistics hub, with major road and rail links facilitating the distribution of goods both regionally and nationally. The sector includes a diverse mix of large retail chains, independent wholesalers, and smaller high-street businesses, with cities like Leeds and Sheffield acting as retail epicentres. 

However, rising operational costs, changing consumer behaviours post-pandemic, and increasing competition from e-commerce platforms has made it more challenging for the industry to sustain. These pressures, coupled with the broader economic uncertainties, have led to a rise in insolvency risks within the sector, particularly for small and medium-sized businesses. 

Manufacturing, particularly advanced manufacturing, is a cornerstone of the regional economy, with significant contributions from industries like machinery, food production, and textiles. The region has witnessed substantial growth in manufacturing jobs, surpassing national averages, thanks to initiatives like the Advanced Manufacturing Park and collaboration with research institutions such as the University of Sheffield’s AMRC. 

A rise in insolvency levels in this region will impact both these industries significantly. For the wholesale and retail industry, insolvencies can disrupt supply chains, leading to ripple effects for dependent businesses, including independent retailers and high-street outlets. 

In manufacturing, insolvencies could have a dual impact. While larger advanced manufacturing firms might weather the storm, small and medium-sized manufacturers face severe threats due to high energy prices, supply chain bottlenecks, and inflationary pressures. Key regional industries like food production and textiles, which often operate on tight margins, are particularly vulnerable. The knock-on effects could weaken the overall economic resilience of the region, reducing both consumer and business confidence in the long term.

Insolvency Insights: Women-led companies more resilient to financial distress

Recent research from Company Rescue highlights a notable advantage for female-led businesses: they are significantly less likely to face insolvency than their male-led counterparts. Despite the fact that only a fraction of UK businesses are led by women, their resilience during times of economic stress showcases their financial stability and long-term viability.

Female-led businesses show an insolvency rate of just 0.41%, compared to 0.7% for male-led companies, making male-led firms 71% more likely to go insolvent. Industries like wholesale retail and food and hospitality saw the highest insolvency rates for women-run firms, while construction and manufacturing topped the list for men-led businesses.

A lot depends on external factors like industry type and economic challenges, which play a role in insolvency risks. However, female founders are often associated with cautious risk management and financial discipline, contributing to their businesses’ stability.

What opportunities does this open up for distressed business buyers?

By supporting women entrepreneurs, UK investors can create a more balanced and resilient economy while fostering financial inclusivity and growth. Here’s how:

Sector-specific wins: Industries like education and health and social care, which have a significant proportion of female-led enterprises, may offer long-term growth potential, especially in sectors less affected by economic shocks.

Leveraging established market presence: Many female-led businesses already possess strong organisational cultures, higher employee satisfaction, and better customer loyalty. Buyers can leverage these advantages to rebuild or rebrand the business, reducing turnaround time and operational restructuring costs.

Bridge the financial gap: Addressing the gender funding gap could be an opportunity for buyers to inject capital into female-led businesses that have been underfunded but show promise. This not only enhances business performance but also positions buyers as advocates of financial inclusion, improving their market reputation.

Focus on strategic partnerships: Buyers could collaborate with initiatives like the Invest in Women Taskforce, gaining access to networks, talent, and potentially favourable investment terms. Supporting these businesses might also unlock grants or funding aligned with promoting diversity and inclusion.

Insolvency News: Multiple UK Councils at the risk of bankruptcy

The financial crisis in UK councils is intensifying, with more local authorities facing the risk of bankruptcy due to severe funding shortfalls and increasing service costs. Councils are struggling with deficits, especially in adult social care, children’s services, and special educational needs and disabilities (SEND). While forecasts suggest up to 60% of county and unitary authorities could go bankrupt by 2028 without additional funding, some are already teetering on the edge, with insolvencies happening in real time as the funding gap widens. 

Cheshire East Council is now forecasting a £20 million financial shortfall this year, a slight improvement from the £26 million deficit predicted three months ago. However, councillors remain deeply concerned, with one Labour member describing the situation as “very, very gloomy” and a Conservative urging the council to do everything possible to avoid issuing a Section 114 notice—an indication of effective bankruptcy. The council has already approved over £90 million in cuts for the next four years and is seeking exceptional financial support from the government to avert further crisis​. 

Additionally, Hampshire County Council is warning that, without further government support, it risks going bankrupt within two years. The council’s financial forecast reveals it will struggle to meet its legal obligation to balance its budget by 2026/27, with limited room for flexibility after drawing from reserves next year. Conservative leader Nick Adams-King described the situation as a “crisis point” and called for more autonomy to innovate and improve the authority’s financial outlook. This warning comes amid a rise in council tax bills, which will increase by up to 5% in April, as the government maintains the current cap​. 

Businesses in these areas might also be at greater risk if local governments cut services or increase local taxes​. Additionally, the rise in council tax bills, which will increase by up to 5% in April 2025, could create further pressure on households, leading to reduced consumer spending in local businesses, especially in sectors heavily dependent on local footfall. 

Insolvency News: Typhoo Tea in Administration due to financial struggles

Typhoo Tea, once a household name and the UK’s oldest tea brand, is teetering on the edge of collapse. The company has announced plans to call in administrators as it grapples with more than £70 million in debt amid a steady decline in sales. Sales have fallen sharply, from £34 million to £25 million between 2022 and 2023. The company has also been losing money year on year. 

Typhoo’s latest financial records show an alarming increase in losses—from £9.6 million to £38 million—due to a combination of factors, including a redundancy program, the relocation of production to third-party manufacturers, and the severe disruption caused by a trespassing incident at its factory in Moreton, Wirral. The demand for its products has also decreased in the last few years as coffee consumption has increased across the country. 

In its ongoing efforts to reduce costs and attempt to turn things around, Typhoo initiated a restructuring plan that involved slashing unprofitable product lines and closing its factory, which was deemed inefficient. It managed to recover some funds from insurance claims related to the trespassing incident and from the sale of its factory and land, generating £4.6 million.

Despite these efforts, Typhoo has been in a constant state of decline for years, with its last pre-tax profit of just £220,000 recorded back in 2017. Since then, the company has accumulated over £100 million in losses, and its brand value has continued to suffer. While the filing for administration does not mean the company is officially in bankruptcy, it marks a critical juncture for Typhoo. Early intervention could still provide solutions, but time is running out for the company to secure its future.