The Insolvency Service publish the eleventh release, of 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.
Company Insolvencies (UK):
In February there was a total of 686 registered company insolvencies across England and Wales, further broken down as follows:
- 591 creditors voluntary liquidations (CVLs) – 38% lower to that in February 2020
- 56 administrations – 62% lower to that in February 2020
- 33 compulsory liquidations – 86% lower to that in February 2020
- 6 company voluntary arrangements (CVAs) – 68% lower to that in February 2020
- 0 receiverships
These figures are 49% lower than that in the same month the previous year. It is also key to note that these numbers are the lowest monthly figure since January 2019. Since March 2020, the amount overall of registered company insolvencies each month has been lower than the corresponding month of the previous year, in 10 of 11 months.
Note: between 26 June and 28 February 2021, four companies were granted a moratorium and five 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 until 30 June 2021.
Company Insolvencies (Scotland)
February 2021 saw 26 company insolvencies in Scotland, comprising of 7 compulsory liquidations, 16 CVLS, 2 administrations, 1 CVA and no receiverships. Overall, this is a reduction of 70% company insolvencies, compared to that in February 2020.
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 nine out of eleven subsequent months.
Company Insolvencies (Northern Ireland)
In February 2021, there were 5 company insolvencies in Northern Ireland; all being CVLS; there were no compulsory liquidations, administrations, CVAs or receiverships. The total figure here was down by 81% from February 2020.
Touching on individual insolvencies….
For UK figures, they were relatively low in February, seeing a 42% decrease compared to February 2020. 2021 February saw 898 Debt Relief Orders (DROs) and 1,389 bankruptcies. Comparing to January 2021, the statistics flipped; January saw more DROs than bankruptcies, whereas February saw the opposite.
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 6,138 individual voluntary arrangements (IVAs) registered, on average, during the three months ending February 2021. This was 11% higher than the three-month average observed in the period ending February 2020 – but please note this series is volatile due to technical issues experienced by one IVA provider, meaning IVAs were not registered with the Insolvency Service on a timely basis.
When looking at the figures for Northern Ireland, February 2021 saw 144 individual insolvencies, down 46% from February 2020. This consisted of 107 IVAs, 27 DROs and 10 bankruptcies.
Find the full publication of statistics here.