The Insolvency Service publish the sixth release in its monthly series to provide more up to date information on the number of companies and individuals who are unable to pay debts and enter formal insolvency procedures due to the COVID-19 pandemic.
Overall, the numbers of company and individual insolvencies remained low in September 2020, compared to that in September 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.
UK Insolvency Statistics September 2020
Statistics on new company and individual insolvencies in England and Wales, and related statistics for Northern Ireland. Company statistics are presented for Scotland.
In response to the coronavirus (COVID-19) pandemic, the individual and company September 2020 insolvency statisticsfor England and Wales have been published by the Insolvency Service, together with related insolvency figures for Scotland and Northern Ireland.
This statistics release contains the latest data on monthly company and individual insolvency (companies and individual people who are unable to pay debts and enter formal procedures). Statistics are presented separately for England and Wales , Scotland and for Northern Ireland in this release.
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 – September 2020
Total company insolvencies decreased in September 2020 when compared to September 2019. In September 2020, there were a total of 926 company insolvencies in England and Wales, which included:
- 742 creditors’ voluntary liquidations (CVLs)
- 44 compulsory liquidations
- 109 administrations
- 31 company voluntary arrangements (CVAs)
- 0 receiverships
The overall number of company insolvencies decreased by 39 per cent in September 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 32 per cent and 81 per cent respectively. There was also a 31 per cent decrease in the numbers of administrations.
The number of CVAs increased in September 2020 by 41 per cent when compared to the same month last year. However, The Insolvency Service do highlight that the number of CVAs in September 2019 (22) was lower than typically seen in other months during the 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 – September 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 September 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 September 2019. In September 2020, there were:
- 4,639 IVAs registered (using a three-month rolling average)
- 1,527 DROs
- 1,036 bankruptcies (963 debtor bankruptcies and 73 creditor bankruptcies)
Debt relief orders and bankruptcies
There was a 37 per cent reduction in DROs registered when compared to September 2019, while bankruptcies also fell by 24 per cent when compared to the same month as last year. The reduction in bankruptcies was driven by a 14 per cent fall in debtor bankruptcies and a 71 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.
New procedures introduced by CIGA 2020
Between the 26 June and 30 September 2020, two companies obtained a moratorium and one company had a restructuring plan sanctioned by the court. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.
The low number of cases of each of these new legislative tools since the Act came into force is likely to be as a result of the range of Government support provided to companies as mentioned above, including the range of temporary measures that have recently been extended for a further period.
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 September 2020 were 38 per cent lower when compared to the average number of registered IVAs during each of the three months ending September 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 – September 2020
The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. They reported that in September 2020 company insolvencies in Scotland decreased when compared to September 2019.
There were 43 company insolvencies in total, a decrease of 43 per cent when compared to September 2019. Of the 43 total insolvencies in Scotland in September 2020, there were:
- 12 compulsory liquidations
- 22 CVLs
- 9 administrations
- 0 CVAS
- 0 receiverships
Company and individual insolvency statistics for Northern Ireland – September 2020
In Northern Ireland in September 2020 there were:
- 10 company insolvencies
- 142 individual insolvencies
Companies insolvencies fell by 72 per cent when compared to September 2019 and consisted of 7 CVLs, 1 administration and 2 CVAs. There were no compulsory liquidations or administrative receiverships.
Individual insolvencies were down 54 per cent from September 2019 and consisted of 109 IVAs, 20 DROs and 14 bankruptcy
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 September 2020, published 14 October 2020 – see the full report here: https://www.gov.uk/government/statistics/monthly-insolvency-statistics-september-2020
Image source: The Insolvency Service Monthly insolvency statistics, September 2020