The Insolvency Service publish the fourth 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 July 2020, compared to that in July 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.
Though overall there was a drop in company insolvencies, there was a rise in the amount of companies entering administration in July 2020, by a quarter, compared to July 2019. Compulsory liquidations remained low, compared to the same month the year before, but increased to the highest monthly level since lockdown was implemented (23rd March).
Company Insolvencies (UK):
In July, the breakdown of the 995 total company insolvencies in England and Wales is as follows:
- 590 creditors voluntary liquidations (CVLs)
- 182 administrations
- 166 compulsory liquidations
- 17 company voluntary arrangements (CVAs)
- 0 receiverships
This was a 34% decrease overall in company insolvencies, compared to the same month last year. This is thought to be driven by the decrease in CVLs and compulsory liquidations, which fell by 41% and 36% respectively. CVAs were also lower, by 56%, when compared.
It is thought that the reduction in the number of company insolvencies was driven by the range of Government support put in place to financially support companies in response to the pandemic. The government also announced they would prohibit the use of statutory demands and certain winding-up petitions from 27 April to 30 June 2020 – further extended until 30 September by the Corporate Insolvency and Governance Act.
Company Insolvencies (Scotland)
July 2020 saw 52 company insolvencies in Scotland, comprising of 20 compulsory liquidations, 28 CVLS, 6 administrations, 4 CVAs and no receiverships. Overall, this is a reduction of 46% company insolvencies, compared to that in July 2019.
Company Insolvencies (Northern Ireland)
In July 2020, there were 10 company insolvencies in Northern Ireland; made up of 7 CVLs, 1 CVAs, 1 administration and the first compulsory liquidation in Northern Ireland since lockdown was implemented. There were no administrative receiverships. The total figure here was down from 21 in July 2019.
Touching on individual insolvencies….
For UK figures, figures remained low in July. There were 1,621 Debt Relief Orders (DROs) and 913 bankruptcies. This was a reduction by 31% and 38% respectively, compared to the same month last year.
It was also found that there were 7,322 individual voluntary arrangements (IVAs) registered, on average, during the three months ending July 2020. This was the same three-month average observed in the period ending July 2019.
When looking at the figures for Northern Ireland, July 2020 saw 160 individual insolvencies, down 19% from July 2019. This consisted of 25 debt relief orders, 134 IVAs and 1 bankruptcies.
Find the full publication of statistics here.