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Insolvency Statistics show an increase in company insolvencies

Insolvency Statistics show an increase in company insolvencies

Today, we saw the release of the latest insolvency statistics for Q2 (April-June) 2019. Overall, the number of company insolvencies increased in Q2 2019, compared to Q1 2019. This was driven by an increase in creditors voluntary liquidations. All other insolvency mechanisms saw a slight fall.

The statistics show a total of 4,321 company insolvencies. This 11.9% increase, compared to the same quarter last year, is the highest underlying level of insolvencies of any quarter since Q1 2014.  The rise in insolvencies was driven by a 6.9% increase in CVLs, this amounted to 70.4% of all corporate insolvency events.

Interestingly, for all other company insolvency mechanisms, there was a decrease in usage. Compulsory Liquidations fell by 4.1%, to 722, CVAs fell by 1.1% and Administrations fell by 11.4%, compared to Q1 2019.

The statistics reveal that Q2 2019 saw 400 administrations, this being the second-highest quarterly level since Q1 2014.

For CVAs there was little difference, with the statistic going from 94 in Q1 2018 to 93 in Q1 2019 and then 92 in Q2 2019. CVAs are therefore still a very underutilised option in corporate insolvency – only accounting for 2.1% of all insolvencies. This is despite the high profile CVAs seen in the media and mainly based on high profile CVAs for household names on the high street.

In the 12 months ending Q2 2019, 1 in 237 companies were liquidated. This rate of liquidations had increased, for the fifth consecutive quarter, indicating more and more companies are facing the possibility of liquidation.  Company liquidation rates tend to link to economic conditions. Typically, as we experience economic growth, we experience a decrease in liquidation rates. It suggests that economic growth is at best flat.

For the full report, please see here: https://www.gov.uk/government/statistics/company-insolvency-statistics-april-to-june-2019

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