Company Insolvency Increases and Director Disputes

company insolvencies

 

Government statistics are now showing that the number of company insolvencies in the UK has been increasing. Company insolvencies have increased during 2021 and 2022, with 2023 seeing the highest annual number of company insolvencies since 1993. Furthermore, company insolvencies in 2023 and in 2024 to September were at levels last seen during the 2008-09 recession. It is possible that the tax changes in the budget and stubborn borrowing rates could fuel more business closures in 2025 however, it is too early to tell in relation to this.

A deteriorating financial outlook is one of many causes of a director or partnership disputes which range from a disagreement over strategy, finance, lending, dividend payments, regulatory and corporate governance issues. There could be a disagreement at Board level when it comes whether or not a company should be liquidated.

Ideally a methodology for dispute resolution should be clearly specified within the shareholder agreement. However, if this has been poorly drafted and/or it is challenged, this could exacerbate the problem.

Director level disputes can be deeply challenging and can occur at a time of already heightened business and personal stress. As such minimising conflict and building a consensus is beneficial. There can be complex legal issues at play so seeking professional support early on is advisable.

For more information on Government statistics in this area go to: https://www.gov.uk/government/statistics/company-insolvency-statistics-september-2024 

To contact one of our specialists in this area contact us and we will provide you with confidential, experienced, considered support.

T: 0800 302 9448

E: info@pictons.co.uk