The month of May 2021 was the first month where the total number of insolvencies increased compared to 2020. A total of 1,369 companies become insolvent, an increase of 2% compared to last month (April) and a 19% increase compared to May 2020.
This slow increase in the overall number of insolvencies year-to-date undoubtedly reflects the particular circumstances resulting from the Covid-19 pandemic, and resulting lockdown. Many distressed businesses have managed to keep afloat by making use of the high level of government support available, and many may well have opted to file for an extension with Companies House. However, as government schemes come to an end and cash reserves become scarce many businesses may struggle to stay afloat.
The total number of UK company insolvencies for the year 2021 rose to 6,695. This represents a 24% decrease when compared to the same period in 2020
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 – May 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.
Total company insolvencies increased in May 2021 when compared to May 2020. In May 2021, there were a total of 1,011 company insolvencies in England and Wales, which included:
- 930 creditors’ voluntary liquidations (CVLs)
- 31 compulsory liquidations
- 43 administrations
- 6 company voluntary arrangements (CVAs)
- 1 receivership
Overall company insolvencies in May 2021 were 25 per cent lower when compared to May 2019 but 7 per cent higher when compared to May 2020. When compared with the number of company insolvencies registered in May 2020 and May 2019:
- compulsory liquidations were 6% lower than 2020 and 89% lower than 2019
- CVLs were 18% higher than 2020 and 3% lower than 2019
- CVAs were 50% lower than 2020 and 81% lower than 2019
- administrations were 61% lower than both 2020 and 55% lower than 2019
The construction sector moves into the most significant contributor to the insolvency numbers representing 17% of all insolvencies in May 2021, with 235 companies becoming insolvent. Year to date, construction accounts for 14% of all company insolvencies in 2021.
Two sectors that traditionally see large numbers of failures are also worth examining and worth keeping under review. Wholesale & Retail saw 141 companies become insolvent in May, while 160 Hospitality businesses failed. Taken together these sectors represent 22% of all insolvencies and with both areas particularly vulnerable to government lockdown measures and restrictions we may continue to see similar levels of failures throughout 2021.
Individual insolvency statistics for England and Wales – May 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 May 2021 when compared to the same month last year and May 2019, while IVAs were lower than the rolling three-month average observed in the period ending May 2020 but slightly higher than May 2019.
In May 2021, there were:
- 7,393 IVAs registered (using a three-month rolling average)
- 1,525 DROs
- 718 bankruptcies (647 debtor bankruptcies and 71 creditor bankruptcies)
Debt relief orders and bankruptcies
The number of DROs in May 2021 was similar to in May 2020 and 33 per cent lower when compared to May 2019.
Bankruptcies were 3 per cent lower than in May 2020 and this was driven by a drop in debtor applications (6 per cent lower), however creditor petitions were 39 per cent higher. It should be noted that creditor petitions were particularly low in May 2020 as this was during the first UK lockdown. Compared to May 2019, total bankruptcies were 50 per cent lower.
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 May 2021 were 6 per cent lower when compared to the average number of registered IVAs during each of the three months ending May 2020 and 4 per cent higher than the three-months ending May 2019.
Company insolvency statistics for Scotland – May 2021
The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in May 2021 company insolvencies in Scotland increased when compared to May 2020 but decreased when compared to May 2019.
There were 51 company insolvencies in total, an increase of 46 per cent when compared to May 2020 and 35 per cent lower than May 2019. Total corporate insolvencies in Scotland in May 2021 consisted of:
- 8 compulsory liquidations
- 37 CVLs
- 5 administrations
- 1 CVA
- 0 receivership appointments
Company and individual insolvency statistics for Northern Ireland – May 2021
In Northern Ireland in May 2021 there were:
- 7 company insolvencies
- 194 individual insolvencies
Companies insolvencies were 40 per cent higher when compared to May 2020 but 83 per cent lower when compared to May 2019 and consisted of six CVLs and one compulsory liquidation. There were no CVAs, administrations or administrative receiverships.
Individual insolvencies were 120 per cent higher than in May 2020 but down 18 per cent from May 2019 and consisted of:
- 156 IVAs
- 26 DROs
- 12 bankruptcies
It should be noted that the number of individual insolvencies in May 2020 was particularly low, following no individual insolvencies in April 2020, so comparisons to this month may not be valid.
The following methodology statuses is used to determine if a company has become insolvent and will count insolvency based on its first insolvency trigger from one of the statuses below:
- In Liquidation.
- Administrator Appointed.
- Appointment of Liquidator.
- Meeting of Creditors.
- In Administration.
- In Receivership.
- Administrative Receiver Appointed.
- Administration Order.
- The company is wound-up.
Next insolvency statistics release
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 May 2021 published 15 June 2021 – see the full report here:
Image source: The Insolvency Service Monthly insolvency statistics, May 2021
Individual and company insolvency statistics for June 2021 will be released on 16 July 2021.