Q1 2016: Increase in company insolvencies since last quarter

Written by companyrescuelondonadmin 3 April 2017

The government has published the latest insolvency statistics for January to March 2016. While the total number of companies in a CVA, administration or liquidation increased 5.4% since the previous quarter (which included December, the quietest insolvency month because of Christmas), there are still fewer insolvencies compared to the same time last year (down 3.6%). 

The number of companies in compulsory liquidation increased 36% since Q4 2015 but actually fell by 11.5% since the same period last year. 

Creditor Voluntary Liquidations (CVLs) slightly increased since the last quarter (0.8%) and bucking the trend, rose 0.6% since Q1 2015. This probably reflects the increasing number of smaller “one-man/one-woman” consultancy businesses that KSA is seeing closing down.

The overall estimated liquidation rate was 0.42% over 2015, the lowest on record since 1984. Putting this into context, the Insolvency Act 1986 was introduced two years later, so this is the lowest level of liquidations in the “modern insolvency era”. The 1986 Act set out the new company voluntary arrangement (rescue) and administration options too. So what of rescue methodologies in quarter 1? 

In Q1 of 2016, the number of companies in administration fell 11.1% since the last quarter and also decreased 10.9% since the same time last year. Administrations are now at their lowest level since 2003 with only 301 companies entering administration in England and Wales.

Company Voluntary Arrangements are still falling too and are at their lowest level since 1998. There were 12.8% fewer since Q1 last year. Only 75 companies had CVAs accepted by creditors in Q1 of 2016.

Source: https://www.gov.uk/government/statistics/insolvency-statistics-january-to-march-2016 

It is the first time the overall number of corporate insolvencies has risen since the beginning of 2014 (but only slightly). The rise was mainly due to compulsory liquidations. This indicates more companies failed to seek help sooner and instead let creditors, like HMRC, wind them up. It also suggests creditors had a more aggressive attitude to companies failing to prove their viability.  

The government has produced a company insolvency infographic of the latest results. View it here