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Why More UK Businesses Are Entering Liquidation in 2026

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In recent years, the UK business environment has become increasingly challenging. As 2026 progresses, a noticeable rise in company liquidations is being reported across multiple sectors. While liquidation has always been part of the natural business cycle, several economic and regulatory pressures are contributing to a higher number of businesses closing down. Understanding the reasons behind this trend can help directors recognise early warning signs and make informed decisions about the future of their companies. Rising Borrowing Costs One of the most significant pressures facing businesses in 2026 is the continued impact of higher interest rates. Over the past few years, borrowing costs have increased as the Bank of England sought to control inflation. Many businesses that relied on loans or overdrafts during earlier economic downturns are now facing higher repayment costs. For companies operating with tight cash flow, increased interest payments can quickly reduce profitability. Bu...
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Why UK Furniture Brand Slzzp Entered Administration

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The entry of UK furniture brand Slzzp into administration highlights the continued financial strain facing retailers operating in a challenging and evolving market. While furniture retail has historically been sensitive to economic cycles, recent years have introduced a combination of pressures that have proven particularly difficult for newer and growth-focused brands to manage. Slzzp’s administration is not an isolated incident. Instead, it reflects wider structural issues within the furniture and homeware sector, including weakened consumer demand, rising operating costs, and cash flow challenges linked to long sales cycles and high overheads. Pressure on Consumer Spending Furniture is a discretionary purchase. Unlike essential goods, items such as sofas, beds, and home furnishings are often postponed during periods of economic uncertainty. Although inflation began to stabilise in 2024 and 2025, many households continued to feel the effects of higher living costs, mortgage repayment...
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Location: London, UK
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What Are the Three Different Types of Liquidation?

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If you are considering closing your company, it is important to understand the three different types of liquidation available in the UK . The right option depends on whether your company is solvent or insolvent and how the process is initiated. 1. Creditors’ Voluntary Liquidation (CVL) A Creditors’ Voluntary Liquidation is used when a company cannot pay its debts and is insolvent. In this situation, the directors choose to place the company into liquidation rather than waiting for creditors to take legal action. A licensed insolvency practitioner is appointed to act as liquidator, realise company assets, and distribute funds to creditors. A CVL can help directors deal with creditor pressure, stop legal action, and close the company in an orderly and compliant way. 2. Members’ Voluntary Liquidation (MVL) A Members’ Voluntary Liquidation applies to solvent companies. This means the company can pay all its debts in full, usually within 12 months. An MVL is often used when directors wish t...
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Location: United Kingdom
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What Counts as a Prohibited Company Name Under Section 216?

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When a company enters insolvent liquidation, directors must be very careful about the name of any new business they become involved in. Section 216 of the Insolvency Act 1986 places strict restrictions on the reuse of company names following liquidation. Failing to follow these rules can result in serious consequences, including personal liability for company debts and even criminal penalties. What Is Section 216? Section 216 applies when a company has gone into insolvent liquidation. It prevents a director, or shadow director, of that company from being involved in another company that uses a “prohibited name” for a period of five years following liquidation. The purpose of this rule is to protect creditors and prevent what is commonly known as “phoenixing”, where a business closes with debts and then reopens under the same or a very similar name, leaving creditors misled or unpaid. What Is a Prohibited Name? A prohibited name is broadly defined under the legislation and includes: 1....
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Location: London, UK
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What Happens When I Owe Money to My Own Company?

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It is not uncommon for directors or shareholders to owe money to their own company. This situation often arises through director’s loans, drawings taken in excess of salary or dividends, or business expenses that were never properly reimbursed. While this may seem manageable when a company is trading normally, it can become a serious issue if the business faces financial difficulty or enters liquidation. Understanding what happens when you owe money to your own company is essential, particularly if insolvency is a possibility. The way this debt is treated can have significant legal and financial consequences for directors. This article explains how director debts arise, how they are treated in liquidation, and what directors should be aware of under UK insolvency law. Directors often underestimate how seriously director loans are treated in liquidation. What may have seemed like an informal arrangement while trading can quickly become a formal debt with legal consequences. Addressing ...
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Location: London, UK
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Who Pays for Staff Redundancy When a Business Goes into Liquidation?

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When a business enters liquidation, one of the most pressing and sensitive issues is what happens to employees. For many directors, concerns around staff redundancy, unpaid wages, and legal obligations can be a major source of stress, particularly when cash flow has already dried up. Employees, on the other hand, often face uncertainty about whether they will be paid what they are owed. Understanding who is responsible for paying staff redundancy when a company goes into liquidation is essential for both directors and employees. The answer depends on several factors, including the financial position of the company, the type of liquidation, and the nature of the employees’ claims. This article explains how redundancy pay works in liquidation, who ultimately pays it, and what directors and employees need to know under UK insolvency law. What Happens to Employees in Liquidation? When a company enters liquidation, it usually means the business has ceased trading or is about to stop trading...
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Location: United Kingdom
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Can I Buy Back Assets During or After a Liquidation?

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When a company enters liquidation, directors often worry that everything the business owns will be lost forever. This can be particularly difficult where assets still have value or are essential to a future venture, such as equipment, vehicles, stock, intellectual property, or even the company name. A common and perfectly reasonable question is whether it is possible to buy back assets either during or after the liquidation process. The short answer is yes, it is often possible to buy back assets from a company in liquidation. However, there are strict legal and ethical rules that must be followed. This article explains how asset sales work in liquidation, what directors are allowed to buy, when purchases can take place, and the risks of getting it wrong. What Happens to Company Assets in Liquidation? When a company goes into liquidation, control of the business and its assets passes from the directors to a licensed insolvency practitioner, known as the liquidator. The liquidator’s pri...
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Location: London, UK
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