Insolvency statistics released for October 2020
Latest company and individual insolvency statistics remain low.
The latest monthly release of insolvency statistics for England and Wales was published on 13 November 2020. *
Overall numbers of company and individual insolvencies remained low in October 2020, when compared with the same month in the previous year.
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.
Impact of COVID-19 business support measures
The overall low numbers are likely to be at least partly driven by Government measures set up in response to the coronavirus (COVID 19) pandemic, including:
- Reduced court and tribunal operations and reduced HMRC enforcement activity since the UK lockdown was applied
- Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations) from 27 April and extended further to 31 December 2020 under the extensions to the Corporate Insolvency and Governance Act.
- Enhanced Government financial support for companies and individuals.
As the Insolvency Service does not record whether an insolvency is directly related to the coronavirus pandemic, it is not possible to state its direct effect on insolvency volumes.
The statistics in detail – October 2020*
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
- 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. There was a 42% decrease in the numbers of CVAs.
The reduction in company insolvencies is likely to be in part driven by the range of Government support put in place to support companies in response to the coronavirus (COVID 19) pandemic.
The number of companies entering administration in August 2020 decreased by 35% in comparison to October last year – this is despite an increase in administrations witnessed in the preceding month this year.
New procedures introduced by CIGA 2020
Between the 26 June and 31 October 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.
Debt relief orders and bankruptcies
There were 1,572 DROs in England and Wales representing a 37% reduction in October 2020, compared with the same month last year.
1,048 bankruptcies, made up of 970 debtor bankruptcies and 78 creditor bankruptcies, represent a 25% reduction compared with the same month last year. The reduction in bankruptcies was driven by a 17% fall in debtor applications and a 67% reduction in creditor petitions.
How the numbers may be affected
The fall in DROs and debtor bankruptcies corresponds with a reduction in applications which coincided with the announcement of enhanced Government financial support for individuals and businesses.
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.
Individual voluntary arrangements
There were 6,154 IVAs registered, on average, each month during the three months ending October 2020. This was 9% lower than the rolling three-month average observed in the period ending October 2019.
How the numbers may be affected
IVAs are counted once they are registered with the Insolvency Service and are reported by month of registration date. There can be a time lag between the date on which the IVA is accepted (the date of creditor agreement) and the date of registration by licensed insolvency practitioners. This can lead to volatility in the data from one month to the next and create difficulty in constituting reliable short-term trends.
In addition, recent statistics have been affected by technical issues experienced by an IVA provider. Three-month rolling averages have been calculated to smooth the data and indicate what the overall trend of IVA registrations might look like if the underlying data were less volatile.
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 October 2020, published 13 November 2020 – see the full report here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/934745/Monthly__Insolvency_Statistics_October_2020.pdf
Image source: The Insolvency Service Monthly insolvency statistics, October 2020