June 2025 corporate insolvency statistics arrive at a time when the UK economic narrative is anything but settled. With a new Labour administration still bedding in its first full Budget and headline CPI unexpectedly nudging up to 3.6% again in June, market sentiment remains subdued.
2,043 companies entered insolvency in June 2025, representing an 8% fall on May figures and a 16% reduction on the same month last year. The caseload comprised 1,585 creditors’ voluntary liquidations, 332 compulsory liquidations, 111 administrations and 15 company voluntary arrangements. This all culminates in an insolvency rate of 52.4 per 10,000 companies (01 July 2024 to 30 June 2025), marginally below the rate recorded twelve months earlier.
June’s slight decrease in insolvency activity, albeit from a still considerably elevated base, offers a clear barometer of trading stress, particularly in consumer-facing sectors such as hospitality, that are most exposed to fluctuating discretionary spend.
In the twelve months to 31 May 2025, the accommodation & food service sector recorded 3,381 insolvencies, representing 14% of all cases and ranking third-highest by volume. This total is 10% lower than in the preceding year, indicating a modest easing in distress but far from a full recovery.
Key pressures continuing to drive this elevated distress level include:
- Labour costs and staff availability –The National Living Wage increased by 6.7% in April 2024, employers’ NICs increased to 15% in April 2025, and employee vacancy rates continue to rank among the highest across the UK economy, keeping payrolls under pressure.
- Input costs – Energy and food costs, although off their 2023 peaks, continue to sit well above 2019 levels. Industry commentary points to a further 15–20% rise in utility charges for many operators during 2025 and sustained inflation in key food commodities.
- Tapering Business rates support –The temporary relief for retail, hospitality and leisure properties fell from 75% to 40% from April 2025, materially increasing occupancy costs.
- Steady rather than buoyant demand –Real-wage growth has stalled, and higher interest rates are limiting discretionary spending, forcing operators to differentiate via customer experience or sharp pricing.
From a property perspective, distress is translating directly into market activity and sector change.
Lenders are becoming increasingly proactive in addressing covenant breaches, particularly among operators of labour-intensive, mid-market venues, creating a steady stream of insolvency processes and accelerated property sales.
Concurrently, sale-and-leaseback arrangements are re-emerging as capital-recycling tools, with larger corporates such as Whitbread and Z Hotels looking to bolster their balance sheets while retaining operational control through inflation-linked leases.
Where prospects for trading improvement appear limited, alternative-use strategies and repurposing initiatives, especially conversions to residential, purpose-built student accommodation, or later-living schemes, are being increasingly considered, frequently under permitted development rights to bypass planning obligations.
In light of the above pressures, Watling remains heavily engaged with stakeholders seeking strategic advice on challenged hospitality assets. Current mandates include:
The Cube Hotel, Commercial St, Birmingham B1 1RS
Kerenza Hotel, Flexbury Avenue, Bude, Cornwall, EX23 8RE
Little Silver Country Hotel, Tenterden, TN30 6SP
The Castle Hotel, Lady Bank, Tamworth B79 7NB
The Gull Inn, Loddon Road, Framingham Pigot, Norwich, NR14 7PL
The Orchid Hotel, 28-34 Gervis Road, Bournemouth, BH1 3DH
If you would like informed, practical guidance on any hospitality asset or restructuring matter, the Watling Real Estate team would be delighted to assist – please get in touch.
