Accredited official statistics

Commentary - Company Insolvency Statistics January to March 2022

Published 28 April 2022

Released

28 April 2022

Next release

2 August 2022

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Steven Fifer

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Statistical enquiries

David Webster (responsible statistician)

[email protected]

1. Main messages for England and Wales

• Between 1 January and 31 March 2022 (Q1 2022), there were 4,896 (seasonally adjusted) registered company insolvencies, as shown in Figure 1, comprising 4,274 creditors’ voluntary liquidations (CVLs), 331 compulsory liquidations, 266 administrations, and 25 company voluntary arrangements (CVAs). There were no receivership appointments.

• After seasonal adjustment, the number of company insolvencies in Q1 2022 was 6% higher than in Q4 2021 and more than double the number (112% higher) in Q1 2021. The number of CVLs increased to the highest quarterly level since the start of the series in 1960. The number of compulsory liquidations also increased, but remained lower than levels seen before the coronavirus (COVID-19) pandemic.

• One in 257 active companies (at a rate of 38.9 per 10,000 active companies) entered liquidation between 1 April 2021 and 31 March 2022. This was an increase from the 25.5 per 10,000 active companies that entered liquidation in the 12 months ending 31 March 2021.

Figure 1: Registered company insolvencies increased in Q1 2022, driven by an increase in CVLs and compulsory liquidations, and were higher than pre-pandemic levels.

England and Wales, Q1 2012 to Q1 2022, seasonally adjusted

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

From the start of the coronavirus (COVID-19) pandemic until mid-2021, numbers of company insolvencies were low when compared with pre-pandemic levels. Compulsory liquidation, administration and CVA numbers remained lower throughout 2021 and were still lower than pre-pandemic levels in Q1 2022. This is likely to have been driven in part by Government fiscal and other measures that were put in place to support businesses and individuals, including:

• Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).
• Enhanced government financial support for companies.

On 30 September 2021, some of these temporary measures either ended or were replaced by new tapering measures. On 31 March 2022, all of the remaining temporary insolvency measures ended.

2. Things you need to know about this release

This statistics release contains the latest data on company insolvency in the UK, presenting the numbers of companies who have entered a formal insolvency procedure after being unable to pay their debts. Information is presented separately for England and Wales, Scotland and Northern Ireland.

The Insolvency Service separately publishes monthly statistics to provide more up to date information on the numbers of company and individual insolvencies during this time of economic uncertainty. However, they have not replaced the quarterly National Statistics, since the information presented on a monthly basis is less granular and is less reliable for monitoring changes in trends over time. Note that the monthly statistics on company insolvencies may not be consistent with data presented within this statistical release.

Underlying data for these quarterly statistics for England and Wales were adjusted where there was evidence of seasonality, to account for variation in company insolvencies across the year and allow for comparison to the most recent period within years. Data for Scotland and Northern Ireland were not adjusted. The seasonal adjustment models are typically reviewed on an annual basis. In accordance with the outcome of the April 2022 Seasonal Adjustment Review, CVLs and administrations were seasonally adjusted.

Quarters referred to in this publication are calendar year quarters, such that Q1 2022 is the period from 1 January to 31 March 2022.

2.1 Designation as National Statistics

The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Statistics. Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

The last compliance review was conducted in July 2019.

Designation can be broadly interpreted to mean that the statistics meet identified user needs; are well explained and readily accessible; are produced according to sound methods, and are managed impartially and objectively in the public interest.

3. Company insolvency in England and Wales

3.1 Numbers of company insolvencies

After seasonal adjustment (where applicable), there were 4,896 company insolvencies registered in Q1 2022, 6% higher than the number of company insolvencies registered in the previous quarter and more than double the number (112% higher) during the same quarter in the previous year. The total number of registered company insolvencies in Q1 2022 was the highest since Q2 2012.

Creditors’ voluntary liquidations (CVLs) were the most common company insolvency procedure (87% of cases), followed by compulsory liquidations (7% of cases), administrations (5% of cases) and company voluntary arrangements (CVAs; 1% of cases). There were no receivership appointments, which are now rare (see glossary for further details).

A summary of company insolvencies since Q1 2021 can be found in Table 1 below. The long-term series prior to Q1 2021 can be found in the excel and CSV files that accompany this release.

Unlike the monthly statistics, quarterly statistics are seasonally adjusted to account for seasonal variation in insolvencies across the year and allow for comparison to the most recent period within years.

Table 1: The total number of registered company insolvencies in Q1 2022 was the highest since Q2 2012

England and Wales, Q1 2021 to Q1 2022, seasonally adjusted

	Total company insolvencies	Compulsory liquidations	CVLs	Administrations	CVAs	Receiverships
2021Q1	2,309	117	1,968	187	37	0
2021Q2	3,156	102	2,860	168	25	1
2021Q3	3,981	113	3,680	168	20	0
2021Q4	4,615	155	4,154	273	33	0
2022Q1	4,896	331	4,274	266	25	0
Percentage change, latest quarter (Q1 2022) compared with:
vs 2021Q4	6%	114%	3%	-3%	-24%	[z]
vs 2021Q1	112%	183%	117%	42%	-32%	[z]

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

[z] indicates percentage changes are not applicable as these have not been calculated where both numbers are less than five.

CVLs

In Q1 2022, CVLs accounted for 87% of all company insolvencies. The number of CVLs increased by 3% from Q4 2021 and was 117% higher than during the same quarter last year, after seasonal adjustment. The number of CVLs was the highest in the time series, which began in 1960.

The increase in CVLs between Q2 2021 and Q1 2022 coincided with the phasing out of measures put in place to support businesses during the coronavirus pandemic. For example, the percentage of government contribution to employee wages through the Coronavirus Job Retention Scheme (furlough), decreased from 1 July 2021, with the scheme ending on 30 September 2021. The suspension of wrongful trading liability, which allowed directors to continue trading without facing the threat of personal liability despite uncertainty that their company may not be able to avoid insolvency in the future, ended on 30 June 2021.

Compulsory liquidations

The number of compulsory liquidations in Q1 2022 was more than twice as high (114% higher) as in the previous quarter and nearly three times as high (183% higher) as in Q1 2021. However, compulsory liquidation numbers remained lower than pre-pandemic levels.

Lower numbers of compulsory liquidations since the start of the pandemic are likely to have been driven in part by Government fiscal and other measures that were put in place to support businesses and individuals, including, temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).

On 30 September 2021, some of the temporary Government measures either ended or were replaced by new tapering measures. Until 31 March 2022, the debt threshold for a winding-up petition was £10,000 instead of £750 and creditors were required to provide debtor businesses 21 days to provide proposals for payment before they can proceed with winding up action.

Administrations

The number of administrations in Q1 2022 was similar to the previous quarter, and 42% higher than the number the same quarter of the 2021, after seasonal adjustment.

CVAs

The number of CVAs was lower in Q1 2022 than in Q4 2021 and Q1 2021 (by 24% and 32% respectively).

Receivership appointments

There were no receiverships in Q1 2022.

Moratoriums and restructuring plans

Between 26 June 2020 and 31 March 2022, 36 companies obtained a moratorium and ten companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.

3.2 Liquidation rates per 10,000 active companies

In the four quarters ending Q1 2022, the company liquidation rate was 38.9 per 10,000 active companies in England and Wales (Table 2 and Figure 2 below). This corresponds to 1 in 257 companies entering liquidation in the 12 months ending Q1 2022.

The insolvency rate gives an indication of the probability of a company entering liquidation in the previous four quarters. As the rates are calculated as a proportion of the total number of active companies, they are more comparable over longer time periods than the absolute numbers.

The rates presented for each quarter reflect a four-quarter rolling rate per 10,000 active companies. Therefore, the Q1 2022 rates, for example, were calculated using data covering the period Q2 2021 to Q1 2022.

Table 2: The rate of company insolvencies in the 12 months ending Q1 2022 was higher than in the 12-month periods ending Q4 2021 and Q1 2021

England and Wales, four-quarter rolling rate per 10,000 active companies

	Total liquidations	Compulsory Liquidations	CVLs	CVL following Administration
2021Q1	25.5	1.9	22.0	1.5
2021Q2	26.1	1.7	23.0	1.5
2021Q3	29.3	1.2	26.7	1.4
2021Q4	32.9	1.2	30.6	1.2
2022Q1	38.9	1.7	36.3	0.9
Change in rate per 10,000 active companies, 12 months ending latest quarter (Q1 2022) compared with:
vs 2021Q4	6.0	0.5	5.7	-0.2
vs 2021Q1	13.4	-0.3	14.3	-0.6

Source: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

Change in rate numbers may not equal the difference in rates presented due to rounding.

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

The rate of company insolvencies in the 12 months ending Q1 2022 was higher than in the 12-month periods ending Q4 2021 and Q1 2021.

In the four quarters ending Q1 2022:

• The rate of compulsory liquidation increased by 0.5 per 10,000 active companies from Q4 2021, but was 0.3 lower than the period ending Q1 2021;
• the rate of CVLs rose by 5.7 from Q4 2021, and by 14.3 from Q1 2021; and
• the rate of CVLs after administration was 0.2 lower than Q4 2021 and 0.6 lower than from Q1 2021. Note that CVLs following administration are not new insolvency procedures, and are counted as administrations in Table 1.

Figure 2: The liquidation rate in the 12 months ending Q1 2022 returned close to pre-pandemic levels, driven by a higher rate of CVLs.

England and Wales, Q1 2012 to Q1 2022, four-quarter rolling rate per 10,000 active companies

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

3.3 Company insolvencies by industry (SIC 2007)

The following analysis excludes insolvencies where the company industry was unknown, non-trading or dormant (218 in the four quarters ending Q1 2022, compared to 215 in the four quarters ending Q1 2021). In some cases, confirmation of industry sector for compulsory liquidations may be delayed by one quarter or more and therefore insolvency numbers by industry are provisional.

Note that the numbers of insolvencies in these categories are likely to be partly driven by the number of active companies in a given category and do not reflect the relative likelihood of companies in each industry entering insolvency.

The three industries (in accordance with SIC 2007) that experienced the highest number of insolvencies in the 12 months ending Q1 2022 were:

• Construction (3,213 insolvencies, 19% of cases with industry captured);
• Wholesale and retail trade and repair of vehicles (2,100 insolvencies, 13% of cases with industry captured);
• Accommodation and food services activities (1,977 insolvencies, 12% of cases with industry captured); and

These were also the three sectors with the most insolvencies in the 12 months ending Q1 2021. The construction industry usually has the highest quarterly number of insolvencies of any industrial grouping.

All industries saw increased insolvency numbers in the 12 months ending Q1 2022 compared to the period ending Q1 2021, as shown in Figure 3. For the larger sectors (those accounting for at least 5% of insolvencies), increases ranged from 28% in Manufacturing to 85% in Construction.

Figure 3: All industries saw increased insolvencies in the four quarters ending Q1 2022 compared to the period ending Q1 2021

England and Wales, Q1 2020 to Q1 2022

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

4. Company insolvency in Scotland

Legislation relating to company insolvency in Scotland is devolved. The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. The figures below are not seasonally adjusted.

In Q1 2022, there were 210 total company insolvencies in Scotland, more than double the number (131% higher) in the same quarter of 2021. These comprised 33 compulsory liquidations, 165 CVLs and 12 administrations. There were no CVAs or receivership appointments. These numbers are shown in Figure 4.

Figure 4: Company insolvencies were higher in Q1 2022 than in the same quarter last year, and were similar to pre-pandemic levels

Scotland, Q1 2012 to Q1 2022, not seasonally adjusted

Source: Companies House

Historically, the numbers of company insolvencies in Scotland have been driven by compulsory liquidations. However, since the beginning of the COVID-19 pandemic, there have been fewer compulsory liquidations than CVLs.

Between 26 June 2020 and 31 March 2022, in Scotland, no moratoriums were obtained and two companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.

The total liquidation rate in Scotland for the 12 months ending Q1 2022 was 37.7 per 10,000 active companies, as shown in Figure 5. This was up by 16.7 (from a rate of 20.9 per 10,000 active companies) from the 12 months ending Q1 2021.

Figure 5: Overall liquidation rates in Scotland increased in the 12 months ending Q1 2022 compared to the 12 months ending Q1 2021

Scotland, Q1 2012 to Q1 2022, four-quarter rolling rate per 10,000 active companies

Source: Companies House

5. Company insolvency in Northern Ireland

Company insolvency in Northern Ireland is governed by separate, but broadly similar, legislation to England and Wales, and so figures are presented separately.

There were 56 company insolvencies in Northern Ireland in Q1 2022, nearly four times higher (an increase of 273%) than in the same quarter of 2021. This comprised 28 CVLs, 19 compulsory liquidations, five administrations, three CVAs and one administrative receivership. These numbers can be seen in Figure 6.

Figure 6: Company insolvencies in Northern Ireland remained lower than pre-pandemic levels

Northern Ireland, Q1 2012 to Q1 2022, not seasonally adjusted

Sources: Department for the Economy, Northern Ireland (compulsory liquidations only); Companies House (all other insolvency procedures)

The total liquidation rate in the 12 months ending Q1 2022 in Northern Ireland was 19.1 per 10,000 active companies, as shown in Figure 7. This is an increase of 8.4 (from a rate of 10.7 per 10,000 active companies) from the 12 months ending Q1 2021.

Figure 7: Liquidation rates in Northern Ireland were higher in the 12 months ending Q1 2022 than in the 12 months ending Q1 2021

Northern Ireland, Q1 2012 to Q1 2022, four-quarter rolling rate per 10,000 active companies

Sources: Department for the Economy, Northern Ireland (compulsory liquidations only); Companies House (all other insolvency procedures)

6. Data and Methodology

6.1 Data Sources

Company insolvency data were sourced from Companies House, except for compulsory liquidation data for England and Wales which were sourced from the Insolvency Service, and compulsory liquidation data for Northern Ireland which were sourced from the Department for the Economy.

Companies House data were used to determine all active companies registered in each quarter in the previous twelve months, to calculate insolvency rates for England and Wales. These data are separately published by Companies House on the Gov.uk website.

More information on the administrative systems used to compile insolvency statistics can be found in the Quarterly Statistics Methodology and Quality document.

6.2 Methodology and data quality

Seasonal adjustment

To aid comparison between quarters, underlying data for CVLs and administrations in England and Wales were adjusted where there was evidence of seasonality to minimise the effect of the time of year and provide a true picture of the trends in insolvency. There was no evidence of seasonality in the underlying data on compulsory liquidations, CVAs and receiverships, therefore these data have not been adjusted. Full details on the models used to adjust the data can be found in the Seasonal Adjustment Review published in April 2022.

The data series for Scotland and Northern Ireland do not demonstrate consistent seasonality and only the unadjusted series have been presented, as agreed with the relevant officials in the devolved administrations.

Rates of insolvency

Insolvency rates were calculated for England and Wales, Scotland and Northern Ireland. The total number of companies entering insolvency in each location during the previous twelve months was divided by the mean average number of all active companies registered with Companies House in that location in the same twelve-month period.

6.3 Revisions

These statistics are subject to scheduled revisions, as set out in the published Revisions Policy. Other revisions tend to be made as a result of data being entered onto administrative systems after the cut-off date for data being extracted to produce the statistics. Any revisions to these statistics will be marked with an ‘[r]’ in the relevant table.

Further details on routine and non-routine revisions can be found in the accompanying Quarterly Statistics Methodology and Quality document.

7. Glossary

Key Terms used within this statistical bulletin

Term	Definition
Administration	The objective of administration is the rescue of the company as a going concern, or if this is not possible then to obtain a better result for creditors than would be likely if the company were to be wound up. A licensed insolvency practitioner, ‘the administrator’, is appointed to manage a company’s affairs, business and property for the benefit of the creditors.
Bulk Creditors’ voluntary liquidation	IR35 rules are intended to prevent the avoidance of tax and National Insurance contributions using personal service companies and partnerships. Between April 2016 and early 2019, following changes to the IR35 rules and/or changes in VAT flat rate, some directors of personal service companies had cited these changes as the primary reason that their company’s activities had become unviable, therefore leading to creditors’ voluntary liquidation (CVL) of large numbers of these companies. These additional CVLs are referred to as “bulk insolvencies”.
Company voluntary arrangement (CVA)	CVAs are another mechanism for business rescue. They are a voluntary means of repaying creditors some or all of what they are owed. Once approved by 75% or more of creditors, the arrangement is binding on all creditors. CVAs are supervised by licensed insolvency practitioners.
Compulsory liquidation	A winding-up order obtained from the court by a creditor, shareholder or director. See Liquidation for details on the process.
Creditors’ voluntary liquidation (CVL)	Shareholders of a company can themselves pass a resolution that the company be wound up voluntarily. See Liquidation for details on the process. Administrations which result in a Creditors’ Voluntary Liquidation are recorded separately by Companies House and are excluded from CVL figures as they do not represent a new company entering into an insolvency procedure for the first time. These cases are only ever recorded as Administrations.
Liquidation	Liquidation is a legal process in which a liquidator is appointed to ‘wind up’ the affairs of a limited company. The purpose of liquidation is to sell the company’s assets and distribute the proceeds to its creditors. At the end of the process, the company is dissolved – it ceases to exist. Statistics on compulsory liquidations and creditors’ voluntary liquidations are presented in these statistics. A third type of winding up, members’ voluntary liquidation is not included because it does not involve insolvency.
Moratorium	Moratoriums were introduced under the Corporate Insolvency and Governance Act 2020 to give struggling businesses formal breathing space in which to explore rescue and restructuring options, free from creditor or other legal action. Except in certain circumstances, no insolvency proceedings can be instigated against the company during the moratorium period. It also prevents legal action being taken against a company without permission from the court.
Partnership Winding-up Orders	This is similar to the liquidation of a company. When the partners have decided that the partnership has no viable future or purpose then a decision may be made to cease trading and wind up the partnership. There are two basic ways that the partnership can be wound up: the creditors petition and a partner’s petition.
Receivership Appointments	Administrative receivership is where a creditor with a floating charge (often a bank) appoints a licensed insolvency practitioner to recover the money it is owed. Before 2000 receivership appointments also included other, non-insolvency, procedures, for example under the Law of Property Act 1925. The use of this procedure is restricted to certain types of company, or to floating charges, created before September 2003.
Restructuring Plan	New restructuring measures were introduced under the Corporate Insolvency and Governance Act 2020 to support viable companies struggling with unmanageable debt obligations to restructure under a new procedure. They allow the court to sanction a plan that binds creditors to a restructuring plan if it is fair and equitable. Creditors vote on the plan, but the court can impose it on dissenting classes of creditors (‘cram down’) provided that the necessary conditions are met.
Standard Industrial Classification (SIC 2007)	Used in classifying business establishments and other statistical units by the type of economic activity in which they are engaged. Further information can be found on the ONS website