Monthly UK insolvency statistics – August 2020

insolvency statistics

Monthly UK insolvency statistics - August 2020In response to the coronavirus (COVID-19) pandemic, the individual and company August 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 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.

Overall, the numbers of company and individual insolvencies remained low in August 2020, compared to that in August 2019. This is likely to be driven by the Government measures put in place in response to the coronavirus pandemic, including HMRC reducing its enforcement activity, reduced operational running of the courts, temporary restrictions placed on the use of statutory demands and certain winding up petitions and enhanced government financial support for companies and individuals.

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 – August 2020

Total company insolvencies decreased in August 2020 when compared to August 2019. In August 2020, there were a total of 778 company insolvencies in England and Wales, which included:

  • 586 creditors’ voluntary liquidations (CVLs)
  • 66 compulsory liquidations
  • 110 administrations
  • 15 company voluntary arrangements (CVAs)
  • 1 receivership

The overall number of company insolvencies decreased by 43 per cent in August 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 39 per cent and 67 per cent respectively. There was also a 50 per cent decrease in the numbers of CVAs and administrations fell by 38 per cent.

In July 2020 both administration and compulsory liquidation reached a post-lockdown peak, however numbers were more in line with previous months in August since lockdown was implemented on the evening of 23 March.

According to The Insolvency Service, the overall reduction in company insolvencies was likely to be, in part, 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.

Individual insolvency statistics for England and Wales – August 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 August 2020 when compared to the same month last year, while IVAs were lower than the rolling three-month average observed in the period ending August 2019. In August 2020, there were:

  • 4,885 IVAs registered (using a three-month rolling average)
  • 1,332 DROs
  • 769 bankruptcies (708 debtor bankruptcies and 61 creditor bankruptcies)

Debt relief orders and bankruptcies

There was a 31 per cent reduction in DROs registered when compared to August 2019, while bankruptcies also fell by 43 per cent when compared to the same month as last year. The reduction in bankruptcies was driven by a 36 per cent fall in debtor bankruptcies and a 74 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 August 2020 were 28 per cent lower when compared to the average number of registered IVAs during each of the three months ending August 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 – August 2020

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

  • company insolvencies in Scotland decreased when compared to August 2019
  • there were 44 company insolvencies
  • this was a decrease of 43 per cent when compared to August 2019

Of the 44 total insolvencies in Scotland in August 2020, there were 19 compulsory liquidations, 21 CVLs and 3 administrations and 1 company voluntary arrangement. There were no receiverships.

Company and individual insolvency statistics for Northern Ireland – August 2020

In Northern Ireland in August 2020 there were:

  • 4 company insolvencies
  • 107 individual insolvencies

Companies insolvencies fell by 82 per cent when compared to August 2019 and consisted of 2 CVLs and 2 administrations. There were no CVAs, compulsory liquidations or administrative receiverships.

Individual insolvencies were down 48 per cent from August 2019 and consisted of 82 IVAs, 21 DROs and 4 bankruptcy.

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