Official Statistics

Commentary - Individual Voluntary Arrangements Outcomes and Providers 2021

Published 1 March 2022

Applies to England and Wales

Released

1 March 2022

Next release

February/March 2023

Media enquiries

Steven Fifer

+44 (0)30 3003 1568

Statistical enquiries

David Webster (responsible statistician)

[email protected]

1. Main Messages

• In England and Wales, one in 26 Individual Voluntary Arrangements (IVAs) (3.8%) registered with the Insolvency Service in 2020 terminated within one year of being approved. This was the lowest level recorded in the time series, which began in 2000. Two- and three-year IVA termination rates (for IVAs registered in 2019 and 2018 respectively) also decreased compared to IVAs registered in the preceding years.

• Termination rates over the lifetime of an IVA increased from approximately 25% for IVAs registered between 2011 and 2014 to more than 30% for IVAs registered in 2016 and 2017. The 2016 and 2017 numbers are the highest since 2009 and are likely to increase further, as many IVAs from these years remained ongoing as at 31 December 2021.

• In 2021, 81,199 IVAs were registered. This was the highest annual number in the time series going back to 1990, continuing an increasing trend in IVA numbers as shown in Figure 1. Sixteen firms accounted for more than 90% of new IVAs registered in 2021.

Figure 1: Annual IVA numbers have increased over the past 20 years, reaching a record high in 2021.

England and Wales, 2000 to 2021

Source: Insolvency Service

The reduction in early terminations in the past two years coincided with the
temporary guidance for the IVA protocol effective between 20 April 2020 and 31 December 2021 in response to the coronavirus (COVID-19) pandemic. The initial version of the guidance allowed individuals with existing IVAs to reduce payments by up to 25% and take a payment holiday of up to three months. Revised guidance in September 2020 increased this to up to a 50% reduction in payments and up to a six-month payment holiday.

2. Things you need to know about this release

This statistical release shows the outcome status of Individual Voluntary Arrangements (IVAs) registered between 1990 and 2021 in England and Wales, and a breakdown of the number of IVAs registered by provider from 2018 to 2021. IVAs in Northern Ireland and Protected Trust Deeds in Scotland are not included in this release. The Accountant in Bankruptcy publishes individual insolvency statistics for Scotland. The Insolvency Service also publishes monthly and quarterly individual and company insolvency statistics for the United Kingdom.

An IVA is a legally-binding agreement for a debtor to repay creditors some or all of what they are owed over a period of time (usually five years). IVAs in this publication are classified as ‘ongoing’, ‘completed’ or ‘terminated’. Completed means that the IVA has ended, with the debtor having fulfilled their obligations under the agreement. In this case, the debtor is no longer required to repay any amounts for the debts covered by the agreement. Terminated means that the agreement has ended because the debtor has failed to keep to the terms of the arrangement. In this case, the debtor remains liable for the outstanding debts. Further information can be found in the Glossary.

These statistics are derived from administrative records held by the Insolvency Service, an executive agency of the Department for Business, Energy and Industry Strategy. All IVAs are required to be registered with the Insolvency Service. IVAs in this report are broken down by the year in which they were registered. Most IVAs are registered within 14 days of the date the IVA is approved by creditors.

IVA termination rates are calculated as the number of IVAs registered in a given year that terminated by 31 December 2021, divided by the total number of IVAs registered in that year. For recent registration years, a higher proportion of IVAs remain ongoing, so the termination rates for these years will increase in the future.

3. Individual voluntary arrangements as a proportion of total individual insolvencies

As shown in Figure 2, the number of new IVAs registered each year increased from approximately 50,000 between 2011 and 2016 to more than 75,000 in each of the past three years. The 81,199 IVAs registered in 2021 was the highest recorded annual number. IVAs accounted for nearly three-quarters (74%) of all individual insolvencies, compared to 64% in 2019 and less than 50% before 2014. For more information on individual insolvencies, see the quarterly Individual Insolvency Statistics.

In 2020 and 2021, the increase in IVAs as a proportion of individual insolvencies was predominantly driven by the reduction in the number of bankruptcies and debt relief orders rather than an increase in IVAs. This reduction in overall individual insolvencies is likely to be partly driven by Government measures put in place in response to the coronavirus (COVID-19) pandemic.

Figure 2: Over the past ten years, the number of IVAs has increased, while numbers of other individual insolvency types have stayed constant or decreased.

England and Wales, 2011 to 2021

Source: Insolvency Service

More information about individual insolvencies, including longer-term trends, can be found in the quarterly Individual Insolvency Statistics.

4. Termination of individual voluntary arrangements

IVAs are terminated when the debtor fails to keep to the terms of the arrangement. As shown in Figure 3, the percentage of IVAs that terminate has historically ranged from approximately 25% to 40%. IVA termination rates peaked at 42% for IVAs registered in 2007, before declining to 25% for IVAs registered between 2011 and 2013. The introduction of the IVA Protocol in 2008 is likely to have reduced IVA termination rates by introducing more flexibility to account for debtors’ individual circumstances.

IVA termination rates were higher for IVAs registered between 2015 and 2017 than the historically low levels in the preceding years. The rate of 32% for IVAs registered in 2016 was the highest since 2009. Because 38% of IVAs in 2016 and 60% of IVAs in 2017 remained ongoing as at 31 December 2021, these numbers are likely to increase further. While most IVAs that have lasted four or more years are successfully completed, some are likely to be terminated. Historically, lifetime termination rates have typically been approximately 5-6 percentage points higher than the rate after four years. For example, for IVAs registered in 2011, 19.4% terminated within four years, with an additional 5.5% terminating after four years, for a total termination rate of 24.9%.

Figure 3: IVA termination rates were higher for IVAs registered between 2015 and 2017 than in the preceding years.

England and Wales, 2000 to 2021

Source: Insolvency Service

Bars to the right of the dashed line are faded, because more than 10% of IVAs in these years are still ongoing and the termination rates for these years are likely to increase. The proportion of ongoing IVAs in these years is shown in Table 1 below. An indication of trends for more recent years can be found in the one-, two- and three-year IVA termination rates below.

Table 1: Because IVAs typically last at least 5 years, the majority of IVAs registered between 2017 and 2021 remain ongoing.

England and Wales, 2014 to 2021

Year	Total	Completed (no.)	Completed (%)	Terminated (no.)	Terminated (%)	Ongoing (no.)	Ongoing (%)
2014	51,117	35,090	69	13,189	26	2,838	6
2015	40,007	21,929	55	11,255	28	6,823	17
2016	49,265	14,584	30	15,849	32	18,832	38
2017	59,092	5,699	10	18,165	31	35,228	60
2018	70,685	4,368	6	17,841	25	48,476	69
2019	77,946	2,505	3	12,092	16	63,349	81
2020	78,448	1,157	1	5,681	7	71,610	91
2021	81,199	235	0	1,318	2	79,646	98

5. Percentage of IVAs terminating within one to four years of registration

Figure 4 shows the proportion of IVAs that terminated within one, two, three and four years of approval. Only complete years as at 31 December 2021 are shown. For example, for 2019, only two full years have passed, so three- and four-year registration rates can not be shown for this year.

Between 2011 and 2015, the most common period for an IVA to fail was between one and two years after approval. However, more than half of all IVA terminations occurred more than two years after they were approved. For more recent registration years, terminations between one and two years continued to be more common than before one year.

The one-year termination rate for IVAs registered in 2020 was 3.8%, which is the lowest recorded in the time series back to 2000 and less than half the rate for IVAs registered in 2016, 2017 and 2018. The two-year termination rate of 12.0% for IVAs registered in 2019 was the lowest since 2014.

This reduction in early terminations in the past two years coincided with the
temporary guidance for the IVA protocol effective between 20 April 2020 and 31 December 2021 in response to the coronavirus (COVID-19) pandemic. The initial version of the guidance allowed individuals with existing IVAs to reduce payments by up to 25% and take a payment holiday of up to three months. Revised guidance in September 2020 increased this to up to a 50% reduction in payments and up to a six-month payment holiday.

The three-year termination rate for IVAs registered in 2018 was 22.7%. The termination rate for IVAs registered in 2018 and terminating less than one year later was similar to the previous two registration years, but the two- and three-year rates were lower, consistent with the decline in IVA terminations during the COVID-19 pandemic discussed above.

Figure 4: One and two-year termination rates for IVAs registered in 2019 and 2020 were lower than in recent preceding years, but were similar to the rates for IVAs registered between 2011 and 2014.

England and Wales, 2011 to 2021

Source: Insolvency Service

More detailed information, including cumulative termination rates for one to eight quarters after approval, can be found in Table 2 of the accompanying tables.

6. New individual voluntary arrangement registrations by firm

Table 2 shows a list of IVA firms in descending order of the volumes of IVAs registered in 2021. The top four companies accounted for over 50% of IVAs registered. These four companies were also the top four last year, although the order has changed. The top 16 companies accounted for over 90% of IVAs registered. This is the same number as last year.

Table 2: Sixteen firms accounted for more than 90% of registered IVAs in 2021

Insolvency practitioner firm	New registrations	Percentage of total
Total	81,199	100.0%
Creditfix	17,758	21.9%
The Insolvency Group Ltd	10,962	13.5%
Hanover Insolvency	9,099	11.2%
Financial Support Systems	6,520	8.0%
Quality Insolvency	5,987	7.4%
McCambridge Duffy	2,976	3.7%
Payplan Partnership Limited	2,850	3.5%
The IVA Advisor Limited	2,822	3.5%
Debt Movement UK Ltd	2,738	3.4%
Logan Whyte Ltd	2,391	2.9%
Bennett Jones	2,123	2.6%
Freeman Jones	2,028	2.5%
Abbotts Insolvency Limited	1,646	2.0%
Anchorage Chambers Limited	1,450	1.8%
Forest King	1,120	1.4%
Stepchange	983	1.2%
All Other Firms	7,746	9.5%

Breakdowns for 2018 to 2020 are available in Table 3 of the accompanying data tables.

Some cleaning of the data has been carried out to merge multiple names associated with the same provider. For example, IVAs assigned to ‘Payplan Bespoke Solutions’ and ‘Payplan Partnership Limited’ are both included under ‘Payplan Partnership Limited’.

7. Data and Methodology

7.1 Data Sources

Data used for this report are based on information entered by insolvency practitioners and then uploaded to the Insolvency Service systems. More information on the administrative systems used to compile insolvency statistics can be found in the Statement of Administrative Sources.

7.2 Coverage

Statistics are presented for England and Wales only due to differences in legislation and policy. IVAs in Northern Ireland and Protected Trust Deeds in Scotland are not included in this release. The Accountant in Bankruptcy publishes individual insolvency statistics for Scotland. The Insolvency Service also publishes monthly and quarterly individual and company insolvency statistics for the United Kingdom.

7.3 Methodology and data quality

More detailed methodology and quality information has been published alongside this commentary in the accompanying Methodology and Quality document.

The main quality and coverage issues to note are:

• IVAs in England and Wales are counted within the Insolvency Service official statistics releases once they are registered with the Insolvency Service. However, there is often a time lag between the date on which the IVA is accepted and date of registration by licensed insolvency practitioners. If this time lag varied substantially between years, it is possible that the number of IVAs registered in a year would not accurately reflect the number of IVAs actually started within that year. However, current monitoring suggests that the time lag is fairly stable, with most IVAs registered within 14 days of the approval date.

• The same dataset is used for this publication as for the monthly and quarterly Insolvency Statistics. Therefore, the total number of IVAs registered in each year in this report should align with these publications.

• Data used for this report are based on information entered by insolvency practitioners and then uploaded to the Insolvency Service systems. While some validation checks are undertaken when the information is uploaded, not all errors can be detected. For example, 117 terminated IVAs (0.1% of the total number since 2010) are shown as having a negative duration. These are included in the ‘unknown’ category in Table 2. It is unlikely that data entry errors are common enough to substantially change the conclusions of this report.

Methodology changes since previous release

In this publication, the duration of an IVA is measured as the length of time from the date of approval of creditors to the date it terminated. This improves the accuracy compared to previous publications, which used the date of registration with the Insolvency Service as the start date and therefore underestimated the duration of terminated IVAs, by about two weeks for most IVAs, but up to a few months where IVA registrations were delayed. For consistency with the other tables and the quarterly insolvency statistics, the registration date is still used to assign an IVA to a particular year.

As a result of the change in methodology, numbers relating to IVAs terminating within a given number of years are not directly comparable to previous versions of this publication. However, numbers are no more than 1 percentage point different for any quarter or year as a result of this methodology change and typically differ by much less than this.

In previous versions of this publication, revoked and suspended IVAs were excluded from the total. In this publication, they are included in the terminated category. However, the number of revoked and suspended IVAs is small (less than 0.01% of the total).

7.4 Revisions

These statistics are subject to scheduled revisions, as set out in the published Revisions Policy. Revisions typically tend to be made as a result of data being entered or changed on administrative systems after the previous publication cut-off date for data being extracted to produce the statistics. Revisions can also be caused by changes in methodology as described above. Such revisions tend to be small in the context of overall totals; nonetheless any figures in this release that have been revised since the previous edition have been highlighted with an [r] in the relevant tables.

8. Glossary

8.1 Key Terms used within this statistical bulletin

Term	Definition
Bankruptcy	A form of debt relief available for anyone who is unable to pay their debts. Assets owned will vest in a trustee in bankruptcy, who will sell them and distribute the proceeds to creditors. Discharge from debts usually takes place 12 months after the bankruptcy order is granted. Bankruptcies result from either Debtor application – where the individual is unable to pay their debts, and applies online to make themselves bankrupt, or Creditor petition – if a creditor is owed £5,000 or more, they can apply to the court to make an individual bankrupt. These statistics relate to petitions where a court order was made as a result, although not all petitions to court result in a bankruptcy order.
Debt Relief Order (DRO)	A form of debt relief available to those who have a low income, low assets and debt no more than a specified value. There is no distribution to creditors, and discharge from debts takes place 12 months after the DRO is granted. DROs were introduced in April 2009. A change in eligibility criteria was introduced from 29th June 2021 in which the upper limit of debt increased from £20,000 to £30,000. In addition, the threshold on the value of assets that a debtor can hold and be eligible to enter into a DRO increased from £1,000 to £2,000; the value of a single motor vehicle that can be disregarded from the total value of assets increased from £1,000 to £2,000; and the level of surplus income received by the debtor before payments should be made to creditors increased from £50 to £75 per month.
Individual Voluntary Arrangement (IVA)	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. IVAs are supervised by licensed Insolvency Practitioners.
IVA: Completion	Where the supervisor has issued a certificate (“the completion certificate”) stating that the debtor has complied with their obligations under the arrangement.
IVA: Ongoing	Where the IVA has commenced and remains in progress.
IVA: Termination	Where the supervisor has issued a certificate (“Certificate of Termination”) ending the arrangement because of the debtor’s failure to keep to the terms of the arrangement. Reasons for termination include, for example, missing payments or falling into arrears, change of circumstances where reduced payments are not agreed, and the discovery of higher debts not included on the initial application.
IVA Protocol	A voluntary agreement providing an agreed standard framework for dealing with consumer IVAs. Where a protocol IVA is proposed and agreed, insolvency practitioners and creditors agree to follow the processes and agreed documentation.