The Insolvency Service publish the eight 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 November 2020, compared to that in 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.
Note that the Insolvency Service does not record if the insolvency is directly related to the coronavirus pandemic – it is just assumed and thought some type of link exists. A certain causal effect cannot be stated.
Company Insolvencies (UK):
In November there was a total of 889 company insolvencies across England and Wales, further broken down as follows:
- 767 creditors voluntary liquidations (CVLs)
- 73 administrations
- 34 compulsory liquidations
- 15 company voluntary arrangements (CVAs)
- 0 receivership
This was a 41% 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 28% and 88% respectively. Interestingly, the number of companies entering administration fell by 51% compared to the same month last year. Creditors voluntary liquidations, continues to be the most used mechanism, following the trends so far over the period of these monthly statistic updates. CVAs, Compulsory Liquidations and administrations all fell compared to the amount in October 2020.
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 31 December, by the Corporate Insolvency and Governance Act.
To add, between 26 June and 30 November 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)
November 2020 saw 46 company insolvencies in Scotland, comprising of 13 compulsory liquidations, 26 CVLS, 7 administrations, no CVAs or receiverships. Overall, this is a reduction of 47% company insolvencies, compared to that in November 2019.
Company Insolvencies (Northern Ireland)
In November 2020, there were 7 company insolvencies in Northern Ireland; made up of 5 CVLs, 1 administration and 1 CVAs. No liquidations or receiverships were noted. The total figure here was down by 77% from November 2019.
Touching on individual insolvencies….
For UK figures, they were relatively low in November, seeing a decrease compared to October 2020. There were 1,425 Debt Relief Orders (DROs) and 927 bankruptcies. This was a reduction by 38% and 32% 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 7,057 individual voluntary arrangements (IVAs) registered, on average, during the three months ending November 2020. This was 3% higher than the three-month average observed in the period ending November 2019. Statistics here have also increased compared to that in October 2020.
When looking at the figures for Northern Ireland, November 2020 saw 91 individual insolvencies, down 68% from November 2019. This consisted of 17 debt relief orders, 52 IVAs and 22 bankruptcies.
Find the full publication of statistics here.