Compulsory Liquidations Are Up 25% While Insolvencies Fall

On 29 September 2026, the Insolvency Service launched a five-year strategy that urges people and businesses in financial trouble to act earlier, before their problems escalate. For a creditor holding an unpaid invoice and weighing up compulsory liquidation of the company that owes it, the headline reads well. Earlier action, faster recovery and tougher treatment of fraud all promise help to anyone who is owed money. The strategy helps debtors who want to act, and it changes nothing in the creditor’s procedure.

The strategy is good news for debtors who want to deal with their problems. A creditor who wants a debtor company wound up by the court still needs a formal demand for payment. The demand starts a 21-day clock, and service must hold up if the company challenges it. The strategy does not set those rules, which apply in England and Wales.

A strategy aimed at the debtor’s side

The strategy is candid about its audience. It says the Service will place greater emphasis on helping people, directors and businesses understand their options and act earlier, “before problems escalate”. That is a sensible goal, because a director who seeks advice while the company still has assets has more choices than one who waits for a court hearing.

The practical measures point the same way. The Service has removed the £90 fee for a Debt Relief Order, a route into insolvency for individuals. It has also built a digital connection with debt advisers to shorten applications. A creditor chasing a company that will not pay gains no faster route to a winding-up petition from either change.

Compulsory liquidation is rising while insolvencies fall

The statistics for September 2026 show why that gap matters. There were 1,882 company insolvencies in England and Wales that month, 5% fewer than a year earlier. Within that total, court-ordered liquidations rose 25% to 341, while creditors’ voluntary liquidations fell 9% to 1,420. A voluntary liquidation is one the company’s own shareholders start. A compulsory liquidation is one the court orders, usually on a creditor’s petition.

One month does not make a trend. Even so, the pattern fits a picture of creditors losing patience with companies that will not pay or will not talk. In those cases the directors have either ignored early advice or never sought it.

The road to a winding-up petition has not moved

For most creditors, the court route starts with a statutory demand, a formal written demand for payment in a set form. Under section 123 of the Insolvency Act 1986, a creditor owed more than £750 can serve it by leaving it at the company’s registered office. If the company neglects for three weeks after the demand is left at its registered office to pay, secure or settle the debt to the creditor’s reasonable satisfaction, the law treats it as unable to pay its debts. A creditor who has served the demand properly can then rely on that finding as the usual foundation for winding up by the court, and one who cannot prove service loses that route.

The Insolvency Rules 2016 set the deadlines that follow service. The demand must tell the company that it has 21 days from service to pay. If a creditor presents a petition based on a statutory demand more than four months after service of the demand, the creditor must file a witness statement explaining the delay. A creditor who serves a demand and then lets it sit for five months will have to account for the gap to the court.

Proof of service at the registered office matters

Each of those steps rests on the creditor proving that the demand reached the company in the way the law describes. For a company, that means its registered office. The finance director may well read an email, but it is a different step from the one the statute sets out. If the company later resists the winding-up petition by disputing service, the creditor has to show what it did, where and when.

The same discipline applies to a creditor who first sues for the debt. There is no automatic right to serve a claim form by email, so the defendant or its solicitor must first give a written indication of an email address for service. In England and Wales, email service that falls outside Practice Direction 6A is not proper service, even if the defendant read the message. With a process server, the creditor receives a signed record of what was served, on whom and when.

The case that creditors benefit anyway

Supporters of the strategy would say creditors gain from it indirectly. A director who takes advice early is more likely to preserve assets that creditors can later share. The strategy also promises tougher action against ‘phoenix companies’ (which close owing money and reappear under a new name). A taskforce of 50 professionals is expected to bring better data analytics to high-risk cases by 2028, and one fraud lawyer called the strategy “certainly a welcome development”.

That benefit is real, and a creditor caught out by a phoenix company may well feel it. It depends, however, on the debtor engaging or on the state investigating. The strategy sets no numeric targets and says only that the Service expects to track measures such as the value of criminal assets recovered. So it helps creditors where the debtor cooperates and does little where the debtor stays silent.

Back to the creditor holding the invoice

Return to the creditor who read the 29 September headline with an unpaid invoice on the desk. If the debtor company is already talking to advisers, the strategy may bring an earlier and more orderly outcome. If the company has gone silent, compulsory liquidation still means a demand left at the registered office. The creditor then waits 21 days from service and, if it presents the petition more than four months after service, files a witness statement explaining the delay.

Before the demand goes out, treat service as the part of the case the company is most likely to test. Check the registered office at Companies House on the day the demand goes out. Diary the dates that run from the day of service. Keep a record of who served the demand, where and when. Tremark Associates has served documents for more than 30 years, and that record is what a court will look at if the company disputes service.

If you need a statutory demand or winding-up petition served on a company that has stopped answering, with a record that will stand up if the company challenges it, Tremark Associates can help. Call our team on 0113 263 6466 or use the form below to discuss your matter.

Frequently Asked Questions

What does the Insolvency Service’s 2026 strategy change for creditors?

Very little directly. The strategy focuses on helping people, directors and businesses act earlier, on faster payments and on tougher action against abusive businesses. Its measures of success by 2031 include financial difficulty being resolved faster and criminal assets being recovered more effectively.

How does a statutory demand lead to compulsory liquidation?

It gives the creditor the evidence the court needs. If a creditor is owed more than £750, the company must pay, secure or settle the sum within three weeks. If it does not, the law treats the company as unable to pay its debts. The creditor can then petition the court. The company can ask the court to stop the petition, for example by showing that the debt is disputed.

Can a claim form or statutory demand be served by email?

Usually not without more. A claim form can go by email only where the defendant or its solicitor has given a written indication of an email address for service. A statutory demand on a company is served by leaving it at the registered office, so email is not the route the statute sets out.