In response to the coronavirus (COVID-19) pandemic, the individual and company June 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.
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 – June 2020
Total company insolvencies remained low in June 2020 when compared to June 2019. In June 2020, there were a total of 732 company insolvencies in England and Wales, which included:
- 577 creditors’ voluntary liquidations (CVLs)
- 61 compulsory liquidations
- 100 administrations
- 14 company voluntary arrangements (CVAs)
- no receiverships
The overall number of company insolvencies decreased by 50 per cent in June 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 45 per cent and 78 per cent respectively. There was a 60 per cent decrease in the numbers of CVAs, and a 33 per cent decrease in the numbers of companies entering administration.
The Insolvency Service suggest that the reduction in company insolvencies was likely to have been driven by the range of Government support measures put in place to financially support to companies in response to the coronavirus (COVID 19) pandemic.
The government announced in late April that it would prohibit the use of statutory demands and certain winding-up petitions from 27 April to 30 June 2020 and this was extended to 30 September under the Corporate Insolvency and Governance Act 2020.
Individual insolvency statistics for England and Wales – June 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 June 2020 when compared to the same month last year, while on average IVAs increased when compared to June 2019. In May 2020, there were:
- 8,428 IVAs registered (using a three-month rolling average)
- 1,775 DROs
- 454 bankruptcies (431 debtor bankruptcies and 23 creditor bankruptcies)
Debt relief orders and bankruptcies
There was a 15 per cent reduction in DROs registered when compared to June 2019, while bankruptcies also fell by 65 per cent when compared to the same month as last year. The reduction in bankruptcies was driven by a 58 per cent fall in debtor bankruptcies and an 91 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, there was an 33 per cent increase in IVAs in June 2020 when compared to the average number of registered IVAs during each of the three months ending June 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 – June 2020
The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in June 2020:
- company insolvencies in Scotland decreased when compared to June 2019
- there were 46 company insolvencies
- this was a decrease of 32 per cent when compared to June 2019
Of the 46 total insolvencies in Scotland in June 2020, there were 21 compulsory liquidations, 19 CVLs and six administrations. There were no company voluntary arrangements or receiverships.
Company and individual insolvency statistics for Northern Ireland – June 2020
In Northern Ireland in June 2020 there were:
- 9 company insolvencies
- 272 individual insolvencies
Companies insolvencies were down from a total of 29 in June 2019 and consisted of seven CVLs, one CVAs and one administration. There were no compulsory liquidations or administrative receiverships.
Individual insolvencies were up 42 per cent from June 2019 and consisted of 242 IVAs, 24 DROs and six bankruptcies. The increase in individual insolvencies was driven by delayed registration of IVAs, as a result of issues with remote working immediately after the UK lockdown on 23 March. Therefore, IVAs registered in June include those that would have otherwise been registered in previous months.