The Insolvency Service publish the ninth 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 since the start of the first UK lockdown in March 2020, compared to that in the same time period in 2019. This is likely to be driven by the Government measures put in place in response to the coronavirus pandemic, including temporary restrictions placed on the use of statutory demands and certain winding up petitions and enhanced government financial support for companies and individuals.
The amount of registered company insolvencies for England and Wales in December 2020 was higher than that in the month of 2019, to compare. This is the first time this has happened since the start of the UK lockdown.
Company Insolvencies (UK):
In December there was a total of 1,228 company insolvencies across England and Wales, further broken down as follows:
- 998 creditors voluntary liquidations (CVLs)
- 150 administrations
- 35 compulsory liquidations
- 45 company voluntary arrangements (CVAs)
- 0 receiverships
Compared to the month of December in 2019, compulsory liquidations saw an 80% increase, CVLs rose by 26%, it was a 7% rise for administrations and there were twice as many CVAs.
When looking at figures from November 2020, these figures also have increased. It is too soon to tell if this shall be an emerging trend as since the start of the UK lockdown in March 2020, this is the first month where overall company insolvency registrations have been higher compared to the year before for the same month.
To add, between 26 June and 31 December 2020, four companies were granted a moratorium and two had restructuring plans sanctioned by the court. These new procedures were created by the Corporate Insolvency and Governance Act 2020. Low usage of these legislative tools is thought to be due to the Government support which remains in place for companies. Some of these measures have now been extended for a further period too.
Company Insolvencies (Scotland)
December 2020 saw 57 company insolvencies in Scotland, comprising of 21 compulsory liquidations, 25 CVLS, 11 administrations, no CVAs or receiverships. Overall, this is a reduction of 36% company insolvencies, compared to that in December 2019.
Historically, the number of company insolvencies registered in Scotland has been driven by compulsory liquidations but since April 2020, there have been more CVLs registered compared to compulsory liquidations, for eight out of nine subsequent months.
Company Insolvencies (Northern Ireland)
In December 2020, there were 9 company insolvencies in Northern Ireland; made up of 5 CVLs, 3 CVAs and 1 compulsory liquidation. No administrations or receiverships were noted. The total figure here was down by 79% from December 2019.
Touching on individual insolvencies….
For UK figures, they were relatively low in December, seeing a decrease compared to November 2020. There were 1,241 Debt Relief Orders (DROs) and 807 bankruptcies. This was a reduction by 40% and 26% respectively, compared to the same month last year.
The decrease in bankruptcies is thought to be driven by a fall in debtor applications and creditor petitions. The enhanced Government financial support for individuals and businesses since COVID-19 emerged, coupled with reduced HMRC enforcement activity and reduced running of the courts has contributed to these falls.
It was also found that there were 7,918 individual voluntary arrangements (IVAs) registered, on average, during the three months ending December 2020. This was 38% higher than the three-month average observed in the period ending December 2019. Statistics here have also increased compared to that in November 2020.
When looking at the figures for Northern Ireland, December 2020 saw 156 individual insolvencies, down 17% from December 2019. This consisted of 132 IVAs, 15 debt relief orders and 9 bankruptcies. Though lower compared to statistics of the same period a year prior, these figures were higher when contrasted to that of November 2020.
Find the full publication of statistics here.