Insolvency statistics for England and Wales following coronavirus lockdown

Insolvency statistics in the UK – December 2020

Insolvency statistics in the UK - December 2020In response to the coronavirus (COVID-19) pandemic, the individual and company December 2020 insolvency statistics for England and Wales have been published by the Insolvency Service, together with related insolvency figures for Scotland and Northern Ireland

This statistical release presents the numbers of creditors’ voluntary liquidations (CVLs), administrations, company voluntary arrangements (CVAs) and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates.

Compulsory liquidation data are sourced by the Insolvency Service and accurately numbers of new cases in each month.

Overall numbers of company and individual insolvencies have remained low since the start of the first UK lockdown in March 2020, when compared with the same time period last year. This was likely to be at least partly driven by government measures put in place in response to the coronavirus (COVID 19) pandemic, including:

• Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).

• Enhanced government financial support for companies and individuals.

Insolvency statistics for England and Wales following coronavirus lockdown

The Insolvency Service is releasing monthly company and individual insolvency statistics for England and Wales and Northern Ireland, as well as monthly company statistics for Scotland, throughout the remainder of the coronavirus (COVID-19) pandemic, and for a period thereafter.

However, these statistics are marked ‘experimental’ since the process of compiling insolvency data in monthly format is new to the statistics team at the Insolvency Service and is subject to review. The Insolvency Service also notes that as they do not record whether an insolvency is directly related to the coronavirus pandemic, as it is not possible to state its direct effect on insolvency volumes.

umbers of registered company insolvenciesCompany insolvency statistics for England and Wales – December 2020

Total company insolvencies increased in December 2020 when compared to December 2019. In December 2020, there were a total of 1,228 company insolvencies in England and Wales, which included:

  • 998 creditors’ voluntary liquidations (CVLs)
  • 35 compulsory liquidations
  • 150 administrations
  • 45 company voluntary arrangements (CVAs)
  • 0 receiverships

This statistical release presents the numbers of creditors’ voluntary liquidations (CVLs), administrations, company voluntary arrangements (CVAs) and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates. Compulsory liquidation data are sourced by the Insolvency Service and accurately numbers of new cases in each month.

Overall, numbers of registered company insolvencies have remained low since the start of the first UK lockdown in March 2020, when compared with the same time period last year.

In December 2020 there was a total of 1,228 registered company insolvencies, comprised of 998 creditors’ voluntary liquidations (CVLs), 35 compulsory liquidations, 150 administrations and 45 company voluntary arrangements (CVAs). There were no receivership appointments.

When compared to December 2019, CVLs were 26 per cent higher, CVAs were twice as high (though numbers were small) and administrations were also 7 per cent higher. Only compulsory liquidations were lower when compared to the same period in the previous year (80 per cent).

This is the first month in which overall company insolvency registrations have been higher than the comparable month in 2019 since the start of the first UK lockdown, although statistics for individual months have more potential to be volatile. According to The Insolvency Service, it’s too soon to say whether this represents an emerging trend and it should be noted that the numbers of company insolvencies registered in December 2019 were themselves low compared to all other months in the year.

The overall reduction in company insolvencies since the start of lockdown last year is likely to be driven by the range of government measures put in place to financially support companies in response to the coronavirus pandemic, including the Corporate Insolvency and Governance Act.

The Insolvency Service will publish further analysis of longer-term trends in the quarterly statistics for Q4 2020 on 29th January 2021.

New procedures introduced by CIGA 2020

Between the 26 June and 30 November 2020, four companies obtained a moratorium and two companies had a restructuring plan sanctioned by the court. These two new procedures were created by the Corporate Insolvency and Governance Act 2020. The low number of cases of each of these new legislative tools since the Act came into force is likely to be as a result of the range of  Government support provided to companies as mentioned above, including the range of temporary measures that have recently been extended for a further period.

Individual insolvency statistics for England and Wales – December 2020

As individual voluntary arrangement (IVA) numbers have been calculated using different methodology, they are presented separately to debt relief orders (DROs) and bankruptcies.

Overall DROs and bankruptcies decreased in December 2020 when compared to the same month last year, while IVAs were higher than the rolling three-month average observed in the period ending December 2019. In December 2020, there were:

  • 7,918 IVAs registered (using a three-month rolling average)
  • 1,241 DROs
  • 807 bankruptcies (743 debtor bankruptcies and 64 creditor bankruptcies)

Debt relief orders and bankruptcies

There was a 40 per cent reduction in DROs registered when compared to December 2019, while bankruptcies also fell by 26 per cent when compared to the same month as last year. The reduction in bankruptcies was driven by a 20 per cent fall in debtor bankruptcies and a 60 per cent reduction in creditor bankruptcies.

The fall in DROs and debtor bankruptcies corresponds with a reduction in applications for these services, which coincided with the announcement of enhanced government financial support for individuals and businesses since the emergence of the coronavirus pandemic. The fall in creditor bankruptcies will likely have been a result of reduced HMRC enforcement activity during this period and in part, a result of reduced operational running of the courts during this time.

Individual voluntary arrangements

Due to volatile data, the Insolvency Service provided three-month rolling averages for IVAs, which indicate what the overall trend of IVA registrations might look like. Using the three-month rolling average, IVAs in December 2020 were 38 per cent higher when compared to the average number of registered IVAs during each of the three months ending December 2019.

It is noted that the three-month rolling averages should be used to consider potential changes in IVA trends over time, and both sets of numbers should be used with caution.

Company insolvency statistics for Scotland – December 2020

The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in December 2020 company insolvencies in Scotland decreased when compared to December 2019.

There were 57 company insolvencies in total, a decrease of 36 per cent when compared to December 2019. Total corporate insolvencies in Scotland in December 2020 consisted of:

  • 21 compulsory liquidations
  • 25 CVLs
  • 11 administrations
  • 0 receiverships
  • 0 CVAs

Company and individual insolvency statistics for Northern Ireland – December 2020

In Northern Ireland in December 2020 there were:

  • 9 company insolvencies
  • 156 individual insolvencies

Companies insolvencies fell by 79 per cent when compared to December 2019 and consisted of 5 CVLs, 3 CVAs and 1 compulsory liquidation. There were no administrations or administrative receiverships.

Individual insolvencies were down 17 per cent from December 2019 and consisted of 132 IVAs, 15 DROs and 9 bankruptcies

Advice

We publish a summary of the reports here each month. For advice relating to support, insolvency or recovery options, please contact us.

* This content and data was reported in full in the Insolvency Service Statistics for December, published 15 January 2021 – see the full report here

Image source: The Insolvency Service Monthly insolvency statistics, December 2020

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