In response to the coronavirus (COVID-19) pandemic, the individual and company October 2020 insolvency statistics for England and Wales have been published by the Insolvency Service, together with related insolvency figures for Scotland and Northern Ireland.
In October 2020 there was a total of 856 company insolvencies in England and Wales, comprised of 672 creditors’ voluntary liquidations (CVLs), 59 compulsory liquidations, 104 administrations and 21 company voluntary arrangements (CVAs). There were no receivership appointments.
The overall number of company insolvencies decreased by 42% in October 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 36% and 76% respectively. The number of companies entering administration in September 2020 also fell when compared to the same month last year by 35%. CVAs fell by 42% in October 2020 in comparison to the same period last year.
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 – October 2020
Total company insolvencies decreased in October 2020 when compared to October 2019. In October 2020, there were a total of 856 company insolvencies in England and Wales, which included:
- 672 creditors’ voluntary liquidations (CVLs)
- 59 compulsory liquidations
- 104 administrations
- 21 company voluntary arrangements (CVAs)
- 0 receiverships
The overall number of company insolvencies decreased by 42 per cent in October 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 36 per cent and 76 per cent respectively. There was also a 35 per cent decrease in the numbers of administrations and a 42 per cent decrease in the number of CVAs when compared to the same month last year.
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 – October 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 October 2020 when compared to the same month last year, while IVAs were also lower than the rolling three-month average observed in the period ending October 2019. In October 2020, there were:
- 6,154 IVAs registered (using a three-month rolling average)
- 1,572 DROs
- 1,048 bankruptcies (970 debtor bankruptcies and 78 creditor bankruptcies)
Main Messages for England and Wales
Overall numbers of company and individual insolvencies remained low in October 2020, when compared with the same month in the previous year. This was likely to be at least partly driven by government measures put in place in response to the coronavirus (COVID 19) pandemic, including:
- Reduced operational running of the courts and reduced HMRC enforcement activity since UK lockdown was applied on the evening of 23 March;
- Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations) from 27 April. These restrictions have been extended to 31 December 2020.
- Enhanced government financial support for companies and individuals.
Debt relief orders and bankruptcies
There was a 37 per cent reduction in DROs registered when compared to October 2019, while bankruptcies also fell by 25 per cent when compared to the same month as last year. The reduction in bankruptcies was driven by a 17 per cent fall in debtor bankruptcies and a 67 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 October 2020 were 9 per cent lower when compared to the average number of registered IVAs during each of the three months ending October 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 – October 2020
The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in October 2020 company insolvencies in Scotland decreased when compared to October 2019.
There were 44 company insolvencies in total, a decrease of 47 per cent when compared to October 2019. Of the 44 total insolvencies in Scotland in October 2020, there were:
- 11 compulsory liquidations
- 27 CVLs
- 5 administrations
- 1 receivership
- 0 CVAs
Company and individual insolvency statistics for Northern Ireland – October 2020
In Northern Ireland in October 2020 there were:
- 8 company insolvencies
- 114 individual insolvencies
Companies insolvencies fell by 84 per cent when compared to October 2019 and consisted of 5 CVLs, 1 administration and 2 CVAs. There were no compulsory liquidations or administrative receiverships.
Individual insolvencies were down 51 per cent from October 2019 and consisted of 77 IVAs, 18 DROs and 19 bankruptcies
We publish a summary of the reports here each month. For advice relating to support, insolvency or recovery options, please contact us.
Image source: The Insolvency Service Monthly insolvency statistics, October 2020