In response to the coronavirus (COVID-19) pandemic, the individual and company January 2021 insolvency statistics for England and Wales have been published by the Insolvency Service, together with related insolvency figures for Scotland and Northern Ireland.
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 is likely to be 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.
According to The Insolvency Service, the overall number of company insolvencies since the start of lockdown last year is likely to be impacted 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.
Company insolvency statistics for England and Wales – January 2021
Overall, the 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.
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 provide an accurate measure of the number of new cases in each month. Data for the latest month were extracted from a live system five working days after month end and therefore figures are provisional.
Total company insolvencies decreased in January 2021 when compared to January 2020. In January 2021, there were a total of 752 company insolvencies in England and Wales, which included:
- 613 creditors’ voluntary liquidations (CVLs)
- 45 compulsory liquidations
- 73 administrations
- 21 company voluntary arrangements (CVAs)
- 0 receiverships
When compared to January 2020, overall company insolvencies were 50 per cent lower in January 2021: Compulsory liquidations were 85 per cent lower, CVLs were 39 per cent lower, there were 34 per cent fewer CVAs and administrations were 57 per cent lower.
The Insolvency Service will publish further analysis of longer-term trends in the quarterly statistics for Q4 2020 on 29th January 2021.
Individual insolvency statistics for England and Wales – January 2021
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 January 2021 when compared to the same month last year, while IVAs were higher than the rolling three-month average observed in the period ending January 2020. In January 2021, there were:
- 6,950 IVAs registered (using a three-month rolling average)
- 1,167 DROs
- 818 bankruptcies (740 debtor bankruptcies and 78 creditor bankruptcies)
Debt relief orders and bankruptcies
There was a 47 per cent reduction in both DROs registered and bankruptcies when compared to January 2020. The reduction in bankruptcies was driven by a 43 per cent fall in debtor bankruptcies and a 68 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 January 2021 were 17 per cent higher when compared to the average number of registered IVAs during each of the three months ending January 2020.
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 – January 2021
The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in January 2021 company insolvencies in Scotland decreased when compared to January 2020.
There were 23 company insolvencies in total, a decrease of 68 per cent when compared to January 2020. Total corporate insolvencies in Scotland in January 2021 consisted of:
- 12 compulsory liquidations
- 11 CVLs
- 0 administrations
- 0 receiverships
- 0 CVAs
Company and individual insolvency statistics for Northern Ireland – January 2021
In Northern Ireland in January 2021 there were:
- 3 company insolvencies
- 96 individual insolvencies
Companies insolvencies fell by 88 per cent when compared to January 2020 and consisted of 2 compulsory liquidations and 1 CVL. There were no CVAs, administrations or administrative receiverships.
Individual insolvencies were down 62 per cent from January 2020 and consisted of 74 IVAs, 11 DROs and 11 bankruptcies
Impact of COVID-19 business support measures
The overall low numbers are likely to be at least partly driven by Government measures set up in response to the coronavirus (COVID 19) pandemic, including:
- Reduced court and tribunal operations and reduced HMRC enforcement activity since the UK lockdown was applied
- Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations) from 27 April and extended further to 31 December 2020 under the extensions to the Corporate Insolvency and Governance Act.
- Enhanced Government financial support for companies and individuals.
As the Insolvency Service does not record whether an insolvency is directly related to the coronavirus pandemic, it is not possible to state its direct effect on insolvency volumes
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 January 2021 published 19 February 2021 – see the full report here: Monthly Insolvency Statistics January 2021 – GOV.UK (www.gov.uk)
Image source: The Insolvency Service Monthly insolvency statistics, January 202
Next insolvency statistics release
Individual and company insolvency statistics for February 2021 will be released on 16 March 2021.