The Insolvency Service publish the second release in its new 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 COVID19 pandemic.
It is shared that overall, the numbers of company and individual insolvencies dropped in the days immediately after the UK lockdown was applied (23rd March 2020). It is thought this is due to delays in documents being provided to Companies House by insolvency practitioners, HMRC reducing its enforcement activity, HM Courts & Tribunals Service reducing the operational running of the courts and tribunals and The Insolvency Service, insolvency practitioners and Companies House all having to adjust to new working arrangements.
Company Insolvencies (UK):
In May, the breakdown of the 944 total company insolvencies in England and Wales is as follows:
- 790 creditors voluntary liquidations (CVLs)
- 110 administrations
- 32 compulsory liquidations
- 12 company voluntary arrangements (CVAs)
- 0 receiverships
In summary, company insolvencies fell by 30% compared to the same month last year, this being driven by a fall in the amount of compulsory liquidations by 88 per cent compared to May 2019 and 20 per cent compared to pre-lockdown levels.
Both CVAs and CVLs also saw a decrease in numbers. Administrations rose by 16 per cent compared to May 2019, but this was driven by lower administrations in May 2019 rather than by high numbers in this current period.
It is thought that the fall in compulsory liquidations could be linked to the prohibition of the use of statutory demands and certain winding-up petitions from 27 April to 30 June 2020. Compulsory liquidations require a winding up order by the court; the fact that running costs of the courts has also reduced could also play impact.
Company Insolvencies (Scotland)
In May 2020 there were 35 company insolvencies comprising of 16 CVLS, 10 compulsory liquidations, 6 administrations and 3 CVAs. There were no receiverships. Overall, the amount of company insolvencies had reduced by 55 per cent compared to May 2019.
Company Insolvencies (Northern Ireland)
In May 2020 there were just 5 company insolvencies in Northern Ireland; made up of 2 CVLs, 2 CVAs and 1 administration. There were no compulsory liquidations or administrative receiverships.
Touching on individual insolvencies….
For UK figures, these also remained low in May compared to pre-lockdown figures. The numbers are based on the amount of debt relief orders being 1540 and bankruptcies being 739. Debt relief orders reduced by 32 per cent and bankruptcies fell by 49 per cent in comparison to May 2019 figures.
When looking at the figures for Northern Ireland, May 2020 saw 88 individual insolvencies, done 63 per cent from the same month the year before. This consisted of 40 debt relief orders and 48 IVAs. There were no bankruptcies.
Find the full publication of statistics here.