Monthly UK insolvency statistics – July 2020

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

Insolvency statistics for England and Wales

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.

Company insolvency statistics for England and Wales – July 2020

Total company insolvencies remained low in July 2020 when compared to July 2019. In July 2020, there were a total of 955 company insolvencies in England and Wales, which included:

The overall number of company insolvencies decreased by 34 per cent in July 2020, when compared to the same month last year. This was primarily driven by a decrease in the numbers of CVLs and compulsory liquidations which fell by 41 per cent and 36 per cent respectively. There was also a 56 per cent decrease in the numbers of CVAs.

While the overall number of company insolvencies remained low when compared with the same month last year, the number of companies entering administration in July 2020 increased by 25 per cent when compared to July 2019. However, The Insolvency Service point out that there were two groups of companies that entered administration in July 2020 that included multiple related companies which were all recorded as separate companies entering administration

Compulsory liquidations remained low when compared with July 2019, however they increased to the highest monthly level since the start of lockdown in March. Approximately 70 per cent of the 166 compulsory liquidations in July 2020 had a petition date prior to the UK lockdown, suggesting that the increase in the number of compulsory liquidations in July was largely due to the HMRC processing a backlog of petitions caused by the pandemic.

Individual insolvency statistics for England and Wales – July 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 July 2020 when compared to the same month last year, while on average IVAs stayed the same when compared to July 2019. In July 2020, there were:

  • 7,322 IVAs registered (using a three-month rolling average)
  • 1,621 DROs
  • 913 bankruptcies (849 debtor bankruptcies and 64 creditor bankruptcies)

Debt relief orders and bankruptcies

There was a 31 per cent reduction in DROs registered when compared to July 2019, while bankruptcies also fell by 38 per cent when compared to the same month as last year. The reduction in bankruptcies was driven by a 27 per cent fall in debtor bankruptcies and a 79 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 July 2020 remained consistent when compared to the average number of registered IVAs during each of the three months ending July 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 – July 2020

The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in July 2020:

  • company insolvencies in Scotland decreased when compared to July 2019
  • there were 52 company insolvencies
  • this was a decrease of 46 per cent when compared to July 2019

Of the 52 total insolvencies in Scotland in July 2020, there were 20 compulsory liquidations, 28 CVLs and four administrations. There were no company voluntary arrangements or receiverships.

Company and individual insolvency statistics for Northern Ireland – July 2020

In Northern Ireland in July 2020 there were:

  • 10 company insolvencies
  • 160 individual insolvencies

Companies insolvencies were down from a total of 21 in July 2019 and consisted of seven CVLs, one CVAs, one administration and one compulsory liquidation (the first since lockdown began). There were no administrative receiverships.

Individual insolvencies were down 19 per cent from July 2019 and consisted of 134 IVAs, 25 DROs and one bankruptcy. Total individual insolvencies increased in June 2020, driven by the delayed registration of IVAs, as a result of issues with remote working immediately after the UK lockdown on 23 March. IVAs returned to a more typical level in July 2020.

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