The Insolvency Service publish the sixth 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 September 2020, compared to that in September 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.
Company Insolvencies (UK):
In September there was a total of 926 company insolvencies across England and Wales, further broken down as follows:
- 742 creditors voluntary liquidations (CVLs)
- 109 administrations
- 44 compulsory liquidations
- 31 company voluntary arrangements (CVAs)
- 0 receivership
This was a 39% 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 32% and 81% respectively. Interestingly, CVA usage increased by 41% compared to the same month last year, though it is still lower than seen in other months of the year. Overall, compared to August 2020 statistics, company insolvencies have risen by 148 cases.
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 September 2020, two companies were granted a moratorium and one had a restructuring plan sanctioned by the court. 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)
September 2020 saw 43 company insolvencies in Scotland, comprising of 12 compulsory liquidations, 22 CVLS, 9 administrations and no CVAs or receiverships. Overall, this is a reduction of 43% company insolvencies, compared to that in September 2019.
Company Insolvencies (Northern Ireland)
In September 2020, there were 10 company insolvencies in Northern Ireland; made up of 7 CVLs, 1 administration and 2 CVAs. The total figure here was down by 72% from September 2019.
Touching on individual insolvencies….
For UK figures, they remained low in September. There were 1,527 Debt Relief Orders (DROs) and 1,036 bankruptcies. This was a reduction by 37% and 24% respectively, compared to the same month last year. However, compared to statistics from August 2020, it is an increase.
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 4,639 individual voluntary arrangements (IVAs) registered, on average, during the three months ending September 2020. This was 38% lower than the three-month average observed in the period ending September 2019.
When looking at the figures for Northern Ireland, September 2020 saw 143 individual insolvencies, down 54% from September 2019. This consisted of 20 debt relief orders, 109 IVAs and 14 bankruptcies.
Find the full publication of statistics here.