The sharpest case against the current liquidation market does not come from an angry director. It comes from the Insolvency Service's own CVL research published on 17 December 2024. Using 2,717 completed cases from a sampled 2017 cohort, the report found that no creditor received any payment in 86% of cases. Median creditor recovery was 0%, median total fees were £12,937, and the median value realised was just £5,798. The median time to completion was 712 days, or just under two years. (gov.uk) That matters because it strips away the usual sales language. If a process takes about two years, costs more than the value typically recovered, and still leaves most creditors with nothing, directors are entitled to ask whether they are being sold compliance theatre rather than a genuine solution. That is an inference from the government's own numbers, not a slogan. (gov.uk)
The official evidence is slightly more awkward than the industry's marketing and slightly more precise than some campaign rhetoric. The Insolvency Service did not find that every insolvency practitioner walks away fully paid. It found median post-appointment fees paid as a share of post-appointment fees of 14%, with nil recovery in 33% of cases. But it also found that 83% of cases included pre-appointment fees, with a median pre-appointment charge of about £4,000 and a median total cost equal to 163% of the value of the estate. (gov.uk) So the problem is bigger than one caricature of a greedy practitioner. The problem is a structure in which directors are commonly asked for cash up front to enter a formal process that, on the median figures, does not generate a dividend for creditors and does not even recover enough value to cover its own costs. That is why directors should scrutinise the process itself, not just the personality of the person selling it. (gov.uk)
By the time the government published those findings in December 2024, the market had already been running at historic volume. Official statistics released on 20 January 2026 show 18,525 CVLs in England and Wales during 2025. That was slightly below the 2023 peak, but the Insolvency Service still says the four years from 2022 to 2025 were the four highest CVL years since the series began in 1960. CVLs made up 78% of company insolvencies in December 2025 and remained the dominant form across the year. (gov.uk) Bounce Back Loans fed straight into that machine. An ad hoc government release shows that, as at 31 March 2025, 57,929 companies with Bounce Back Loans had entered CVL, compared with 4,549 in compulsory liquidation, while 50,935 had been dissolved. Across the 114,752 facilities tied to dissolved or liquidated companies, 73,977 had defaulted. (gov.uk)
The sales chain deserves just as much scrutiny as the case files. The current Insolvency Code of Ethics says referral fees or commissions must not be accepted during an insolvency appointment. The fact that the rule exists tells you the conflict risk is not theoretical. Directors should always ask who introduced the case, who is being paid, and at what point so-called free advice turns into a sold appointment. (icaew.com) That matters even more in a record-volume CVL market. When 18,525 CVLs are registered in a year and the official research says the median company has only £5,798 of assets to realise, the commercial pressure sits at the front end of the file: win the instruction, take the pre-appointment fee, and move the case into the system. That is an inference from the official data and the ethical rule against referral payments. (gov.uk)
Directors should focus hard on one structural conflict. In a CVL, the company appoints an authorised insolvency practitioner as liquidator, yet that same office-holder must report on director conduct. The CVL research found 54% of completed cases were sifted in by the Insolvency Service as potentially warranting investigation, only 10% were targeted for investigation, and 5% of the full dataset ended with a disqualification outcome. Across the cases with time-cost data, the median investigation time was 7 hours, representing 15% of total time charged. (gov.uk) That does not prove misconduct by every liquidator. It does, however, show why directors and creditors should reject comforting myths about a fiercely independent forensic check being built into every voluntary liquidation. Even Parliament has raised the point. In the House of Lords on 8 February 2023, Lord Agnew warned of an 'unholy trinity' of director, accountant and 'friendly' practitioner in voluntary liquidations. (hansard.parliament.uk)
Creditor control looks stronger on paper than in practice. Under the post-2016 rules, the decision date in a CVL can be as little as three business days after notice is delivered, with deemed consent used if creditors do not object in time. The government guide still tells directors to appoint an authorised insolvency practitioner, but the statutory timetable gives creditors a very short window to mobilise against the nominated office-holder. (insolvencydirect.bis.gov.uk) For directors, the lesson is not that creditors have no rights. It is that the process is set up to move quickly and quietly unless a creditor is organised, funded and paying attention immediately. If you are being told the appointment is merely procedural, that is exactly the point at which you should slow the conversation down and ask who benefits from speed. That is an inference from the rules and the notice period they allow. (insolvencydirect.bis.gov.uk)
The regulatory story is just as troubling. In its 2021 consultation on the future of insolvency regulation, the government said there was a perception of a lack of impartiality among the recognised professional bodies and that the framework, rooted in the Insolvency Act 1986, had failed to keep up with the modern market. Two years later, on 12 September 2023, the government accepted there were strong arguments for a single regulator but decided not to create one inside the Insolvency Service, opting instead to work with the existing bodies while keeping a reserve power for future change. (gov.uk) Today the regime is centred on three recognised professional bodies - the IPA, ICAEW and ICAS - after Chartered Accountants Ireland withdrew. The Insolvency Service's 2024 annual review also records that the IPA changed its Articles so that, from 1 January 2025, membership and regulatory functions were clearly separated again. That is not proof the system is fixed. It is proof that even the profession's own institutions have had to acknowledge the conflict problem. (icaew.com)
The complaints numbers do not inspire confidence. The Insolvency Service's 2024 annual review says the Gateway received 656 complaints. Only 144, or 22%, were referred to regulators. Another 289, or 44%, were closed, and the review says 205 of those closures - 71% - followed no response to a request for more evidence. Across the profession, there were 63 published sanctions in 2024. (gov.uk) There is a practical warning here for creditors and directors alike. The system expects complainants to assemble a dossier while already dealing with a collapse, staff claims, tax debt, missing records or personal financial strain. Even complaints about the regulators themselves barely moved: in 2024 the Insolvency Service considered two complaints about RPBs and upheld none. That does not mean every rejected complaint lacked merit. It means the burden of proof sits heavily on the people least equipped to carry it. That final sentence is an inference, but it follows from the official pathway and outcomes. (gov.uk)
Directors should also ignore any sales script implying that a CVL is a personal shield. The formal process is one of the triggers for official scrutiny, not an escape from it. In the CVL research, 54% of cases were sifted in for possible investigation and 5% ended with a disqualification outcome. In the Insolvency Service's 2024-25 annual report, 1,037 directors were disqualified for misconduct, 118 directors were made subject to compensation orders or undertakings worth a combined £3.6 million, and 51 criminal prosecutions related to Covid support scheme misconduct led to 19 prison sentences. (gov.uk) The Covid loan figures are especially stark. The same annual report says 730 disqualification outcomes in 2024-25 included allegations tied to one or more Covid financial support schemes. So no director should be sold the idea that paying for a liquidation somehow cleans the slate. It may be the start of the scrutiny, not the end of it. (assets.publishing.service.gov.uk)
Once you strip away the pressure tactics, a more basic question appears: what is the actual problem the company is trying to solve? If it is a tax arrears problem and the business is still trading, HMRC says over 90% of Time to Pay plans are completed successfully. At the end of 2024-25 it was supporting over 913,000 customers through Time to Pay, with £5.7 billion of tax debt sitting inside those arrangements. HMRC also says 122,000 payment plans were set up online during the year. (assets.publishing.service.gov.uk) That does not make Time to Pay right for every case, and a £13 strike-off application is obviously a very different exercise from a formal insolvency process. But it does show how wide the gap is between the state's own low-cost debt management tools and the four-figure entry price often attached to a CVL. Companies House charges £13 online to apply to strike off a company using form DS01. Before any director is told to reach for personal funds, the honest adviser should be explaining the full range of options, the limits of each one, and the director's legal exposure in plain English. (gov.uk)
The official record now tells a consistent story. The government's 2021 consultation questioned the impartiality and fitness of the regulatory framework. The government response in September 2023 stopped short of a single regulator. The CVL research published in December 2024 found zero returns to creditors in most cases. And the January 2026 insolvency statistics showed the market was still processing 18,525 CVLs a year. (gov.uk) Director Freedom's conclusion is straightforward. Not every insolvency practitioner is a wrongdoer, and not every formal process is abusive. But a system can fail without every individual in it being corrupt. When a process is expensive, lightly challenged, poor at paying creditors and still sold as the respectable default, directors should stop asking which practitioner sounds nicest and start asking a harder question: who does this process actually serve? (gov.uk)