Official Statistics

Commentary - Monthly Insolvency Statistics April 2021

Published 18 May 2021

Released

18 May 2021

Next release

15 June 2021

Media enquiries

Steven Fifer

+44 (0)30 3003 1568

Statistical enquiries

Becca Wedge-Roberts (author)

[email protected]

Kate Palmer (responsible statistician)

1. Main Messages for England and Wales

The number of registered company insolvencies in April 2021 was 925:

• 23% lower than the number registered in the same month in the previous year (1,199 in April 2020), and
• 35% lower than the number registered two years previously (1,429 in April 2019).

For individuals, 812 bankruptcies and 1,425 Debt Relief Orders were registered. Bankruptcies and DRO numbers were both similar to April 2020, but lower than in April 2019 (pre-pandemic) by 46% (bankruptcies) and 40% (DROs).

There were, on average, 6,822 IVAs registered per month in the three-month period ending April 2021:

• 22% higher than for the three-month period ending April 2020, and
• 11% higher than the three-months ending April 2019.

Note that the IVA series is historically volatile as it is based on date of registration at the Insolvency Service (see the Data Sources and Methodology section for more information).

Overall numbers of company and individual insolvencies have remained low since the start of the first UK lockdown, as a response to the coronavirus (COVID-19) pandemic in March 2020, when compared with pre-pandemic levels. This is likely to be partly driven by government measures put in place to support businesses and individuals during the pandemic, 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 and individuals.

As the Insolvency Service does not record whether an insolvency is directly related to the coronavirus pandemic, it is not possible to state the direct effect of the pandemic on insolvency volumes.

2. Things you need to know about this release

This monthly series supplements the Insolvency Service’s quarterly company and individual insolvency National Statistics to provide more up to date information, as the coronavirus (COVID-19) pandemic continues, on the numbers of companies and individuals who are unable to pay debts and enter a formal insolvency procedure.

These statistics present monthly numbers of individual and company insolvencies in England & Wales and Northern Ireland. For Scotland, only monthly company insolvency statistics are presented; monthly individual insolvency statistics for Scotland can be found on the Accountant in Bankruptcy (AiB) website.

All figures presented within this release are provisional and subject to review. Further detail can be found in the accompanying Monthly Statistics Methodology and Quality document. Historical data presented within this statistical release may not be consistent with the previously published quarterly company and individual insolvency National Statistics.

On 26 June 2020, the Corporate Insolvency and Governance Act 2020 came into force, introducing measures to relieve the burden on businesses during the coronavirus pandemic. These measures include a moratorium to give companies breathing space from their creditors while they seek a rescue, and a new Companies Act procedure, known as a restructuring plan, that allows companies to restructure unmanageable debt. These statistics provide the number of companies that have obtained a moratorium or have had a restructuring plan following the introduction of these measures.

Previous releases of these statistics were classified as experimental. However, the initial development phase has now ended and the methodology and content have proved sufficiently robust to meet the needs of the users of these statistics, so the experimental statistics designation has now been removed.

2.1 Interpretation of these statistics

Please note that some caution needs to be applied when interpreting these statistics. Notably:

• The underlying monthly data have not been seasonally adjusted and therefore comparisons are made with the same month in the previous two years rather than with the previous month.
• Individual voluntary arrangements (IVAs) are reported based on date of registration at the Insolvency Service, rather than date of approval. There can be a delay between month of approval and month of registration. Due to the volatility of the underlying data on registered IVAs, three-month rolling averages have also been presented to smooth out the data. However, neither counts nor three-month rolling-averages are reliable enough to indicate short-term IVA trends.
• This statistical release presents the numbers of creditors’ voluntary liquidations (CVLs), administrations, company voluntary arrangements (CVAs) and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates.

3. Company and Individual Insolvencies in England and Wales

The first UK lockdown started on 23 March 2020. Therefore, in this release comparisons are made to both April 2020, which coincided with the lockdown, and April 2019 which was before the start of the coronavirus (COVID-19) pandemic.

3.1 Company Insolvencies

This statistical release presents the numbers of CVLs, administrations, CVAs and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates. Compulsory liquidation data are sourced by the Insolvency Service and provide an accurate measure of the number of new cases in each month. Data for the latest month were extracted from a live system four working days after month end and therefore figures are provisional.

Overall, the numbers of registered company insolvencies have remained low since the start of the first UK lockdown in March 2020, when compared with pre-pandemic levels.

In April 2021 there was a total of 925 registered company insolvencies, comprised of 819 CVLs, 26 compulsory liquidations, 75 administrations and 5 CVAs. There were no receivership appointments.

The overall number of registered company insolvencies in April 2021 was 23% lower than in the same month in the previous year and 35% lower than in April 2019.

In April 2021, when compared with the number of company insolvencies registered in April 2020 and April 2019:

• Compulsory liquidations were 74% lower than 2020 and 89% lower than 2019;
• CVLs were 12% lower than 2020 and 20% lower than 2019;
• CVAs were 76% lower than 2020 and 81% lower than 2019; and
• Administrations were 48% lower than both 2020 and 2019.

Figure 1 shows the historical trend of company insolvencies covering the past 25 months. Monthly numbers back to January 2019 can be found in Table 1 of the accompanying tables.

Figure 1: Overall, numbers of registered company insolvencies have remained lower than pre-pandemic levels since the start of the first UK lockdown in March 2020

England and Wales, April 2019 to April 2021, Not seasonally adjusted

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

Since the start of the first UK lockdown the overall numbers of company insolvencies have remained low compared to pre-pandemic levels. The overall reduction in company insolvencies is likely to be in part driven by the range of government support put in place to financially support companies in response to the coronavirus (COVID-19) pandemic. Further details can be found on the Gov.uk website.

Between 26 June 2020 and 30 April 2021, four companies obtained a moratorium and six companies had a restructuring plan registered at Companies House. These two new procedures were created by the Corporate Insolvency and Governance Act 2020.

Monthly company insolvency data for England & Wales can be found in the accompanying tables. Further breakdowns of company insolvencies by Standard Industrial Classification (SIC 2007) are also presented to three-digit level.

3.2 Individual Insolvencies

In this statistical release the numbers of DROs and bankruptcies are presented separately to numbers of IVAs, as IVA numbers have been calculated using different methodology. Further details are provided in the IVA results section below.

Data for the latest month were extracted from a live system four working days after month end and are subject to change. Therefore, figures are provisional.

Debt relief orders and bankruptcies

There were 1,425 DROs and 812 bankruptcies in April 2021 in England & Wales. The bankruptcies were made up of 739 debtor applications and 73 creditor petitions. The number of DROs in April 2021 was 4% lower than in April 2020 and 40% lower than in April 2019. Bankruptcies were 1% lower than in April 2020 driven by a drop in debtor applications (6% lower), but creditor petitions were 121% higher. It should be noted that creditor petitions were particularly low in April 2020 as this was during the first UK lockdown. Compared to April 2019, total bankruptcies were 46% lower; debtor applications were 38% lower and creditor petitions were 76% lower.

Figure 2 shows the historical trend of bankruptcies and DROs covering the past 25 months. Monthly numbers back to January 2019 can be found in Table 3 of the accompanying tables.

Figure 2: Overall, numbers of DROs and bankruptcies have remained lower than pre-pandemic levels since the start of the first UK lockdown in March 2020

England and Wales, April 2019 to April 2021, Not seasonally adjusted

Source: Insolvency Service

The lower numbers of bankruptcies arising from debtor applications, as well as DROs, correspond with a reduction in applications for these services, which coincided with the provision of enhanced government financial support for individuals and businesses since the emergence of the coronavirus pandemic.

Monthly data on DROs and bankruptcies in England & Wales can be found in the accompanying tables, including bankruptcies by employment status. Bankruptcies amongst the self-employed are also presented to the two-digit Standard Industrial Classification (SIC 2007). Due to the small numbers reported it is not feasible to present this information to a three-digit level.

Individual voluntary arrangements

The underlying data for IVA registrations are volatile from one month to the next, so month on month comparisons are not valid. It is particularly important to consider longer term trends when making assessments of IVAs.

Three-month rolling averages are presented to smooth the data and indicate what the overall trend of IVA registrations might look like if the underlying data were less volatile. Further information on the volatility of the IVA data, and the calculation of three-month rolling averages can be found in the accompanying Monthly Statistics Methodology and Quality document. For transparency, both counts and three-month rolling averages are presented in Figure 3 and in the accompanying tables. Whilst 3-month rolling averages are used to consider potential changes in IVA trends over time, both sets of numbers should be used with caution.

There were, on average, 6,822 IVAs registered per month in the three-month period ending April 2021, 22% higher than for the three-month period ending April 2020 and 11% higher than the three-months ending April 2019. It should be noted that one IVA provider experienced technical issues between December 2019 and March 2020 which resulted in IVAs not being registered with the Insolvency Service on a timely basis. A backlog of IVAs were later registered in May 2020, resulting in an artificial ‘peak’ in that month. This meant the number of IVAs registered in the three-months ending April 2020 was artificially low, so comparisons made with this period may not be valid.

Figure 3 shows the historical trend covering the past 25 months. Monthly numbers back to January 2019 can be found in Tables 4 and 4.1 of the accompanying tables.

Figure 3: The average number of IVAs registered per month in the three-month period ending April 2021 was higher than the three months ending April 2019, though data are volatile

England and Wales, April 2019 to April 2021, Not seasonally adjusted

Source: Insolvency Service

IVA registrations presented in Figure 3 are the numbers of registrations with the Insolvency Service in each month. The rolling 3-month averages presented are mean average number of registered IVAs in the three months ending in the reference period. For example, the three-month rolling average estimate for April 2021 is the calculated mean average of the total IVA registrations during February, March, and April 2021.

4. Company Insolvencies in Scotland

Legislation relating to company insolvency in Scotland is partly devolved. AiB, Scotland’s Insolvency Service, administers company liquidations and receiverships in Scotland.

This statistical release presents the numbers of CVLs, administrations, CVAs and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates.

In April 2021 there were 38 company insolvencies registered in Scotland, 17% lower than in April 2020 and 63% lower than in April 2019. This was comprised of 9 compulsory liquidations, 28 CVLs, and one administration. There were no receivership appointments or CVAs.

Historically the volume of company insolvencies registered in Scotland has been driven by compulsory liquidations. However, since April 2020 the numbers of registered CVLs have been higher than registered compulsory liquidations in 11 out of 13 subsequent months.

Figure 4 shows the historical trend of company insolvencies in Scotland covering the past 25 months. Monthly numbers back to January 2019 can be found in Table 7 of the accompanying tables.

Figure 4: Overall, numbers of registered company insolvencies have remained lower than pre-pandemic levels since the start of the first UK lockdown in March 2020

Scotland, April 2019 to April 2021, Not seasonally adjusted

Source: Companies House

Monthly company insolvency data for Scotland can be found in the accompanying tables. Further breakdowns of company insolvencies by Standard Industrial Classification (SIC 2007) are also presented to two-digit level. Due to small numbers it was not feasible to present this information to three-digit level.

Note that this statistical bulletin does not present monthly individual insolvency statistics for Scotland. This information can be found on the AiB website.

5. Company and Individual Insolvencies in Northern Ireland

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

5.1 Company Insolvencies

This statistical release presents the numbers of CVLs, administrations, CVAs and receivership appointments based on their registration date at Companies House, and therefore reflect company insolvency registrations rather than insolvency procedure start dates.

In April 2021 there were five company insolvencies registered in Northern Ireland, 67% higher than in April 2020 but 74% lower than April 2019. This comprised of two compulsory liquidations and two CVLs. There were no administrations, CVAs, or receivership appointments.

Figure 5 shows the historical trend of company insolvencies in Northern Ireland covering the past 25 months. Monthly numbers back to January 2019 can be found in Table 9 of the accompanying tables.

Figure 5: Overall, numbers of registered company insolvencies have remained lower than pre-pandemic levels since the start of the first UK lockdown in March 2020

Northern Ireland, April 2019 to April 2021, Not seasonally adjusted

Sources: Companies House and Department for the Economy

5.2 Individual Insolvencies

In April 2021 there were 226 individual insolvencies in Northern Ireland, 31% lower than April 2019. This consisted of 208 IVAs, nine DROs and nine bankruptcies. As there were no individual insolvencies in Northern Ireland in April 2020, comparisons with this period are not possible.

Figure 6: Overall, numbers of individual insolvencies have remained low since the start of the first UK lockdown in March 2020

Northern Ireland, April 2019 to April 2021, Not seasonally adjusted

Source: Department for the Economy

Figure 6 shows the historical trend of individual insolvencies in Northern Ireland covering the past 25 months. Monthly numbers back to January 2019 can be found in Table 10 of the accompanying tables. It should be noted that there were no new individual insolvencies in Northern Ireland in April 2020 as a result of the lockdown measures being implemented by the Northern Ireland Executive which resulted in the closure of the Courts and Insolvency Service offices in the region.

6. Data and Methodology

6.1 Data Sources

Company insolvency data for England & Wales, Scotland and Northern Ireland are sourced from Companies House, except for compulsory liquidation data for England & Wales and Northern Ireland. Compulsory liquidation data for England & Wales are sourced from the Insolvency Service case information system (ISCIS). Compulsory liquidation data for Northern Ireland are sourced from the Department for the Economy, Northern Ireland.

Individual insolvency data for England & Wales are sourced from ISCIS; individual insolvency data for Northern Ireland are sourced from the Department for the Economy.

Moratorium and Restructuring Plan data are sourced from Companies House. More information on the administrative systems used to compile insolvency statistics can be found in the Statement of Administrative Sources.

6.2 Coverage

This statistical release presents company insolvencies for England & Wales, Scotland and Northern Ireland. Individual insolvencies are presented for England & Wales, and Northern Ireland only. Individual insolvency statistics for Scotland can be found on the AiB website. Insolvency statistics for Scotland and Northern Ireland are presented separately to statistics for England & Wales since they may not be comparable as they are covered by separate legislation and policy responsibility lies with the devolved administrations.

6.3 Methodology and data quality

Detailed methodology and quality information for the monthly insolvency statistical releases can be found in the accompanying Monthly Statistics Methodology and Quality document.

The main quality and coverage issues to note:

1. This statistical release presents the numbers of CVLs, administrations, CVAs and receivership appointments based on their registration date at Companies House, therefore reflecting company insolvency registrations rather than insolvency procedure start dates.
2. There is known seasonality in the underlying data for most insolvency types. Any seasonality is normally adjusted before compiling insolvency statistics. However, these monthly data have not been seasonally adjusted so month-on-month comparisons may not be valid.
3. Data for the latest month were extracted four working days after month end. Since the administration systems are live systems there is an increased likelihood that figures will be revised in the future. Therefore, all figures in this release are provisional.
4. The sum of these monthly statistics may not equal previously published quarterly statistics, due to differing methodologies. In addition, the administrative systems used to capture data are live systems and are subject to amendments.
5. These statistics may not align with information published separately by Companies House, or with data extracted from the Gazette. Further information on why numbers may not align can be found in the accompanying Monthly Statistics Methodology and Quality document.

Aggregate counts of moratoriums and restructuring plans were compiled for the whole period covering 26 June 2020 to 30 April 2021.

Data quality issues affecting underlying data on individual voluntary arrangements

Individual voluntary arrangements (IVAs) are counted within these statistics once they are registered with the Insolvency Service, and they are reported by month of registration date. There is often a time lag between the date on which the IVA is accepted (known as the date of creditor agreement) and date of registration by licensed insolvency practitioners working for firms that specialise in this area, and changes in trends are often partly a result of how promptly and frequently providers register IVAs with the Insolvency Service. Therefore, these monthly statistics are considerably more volatile than the quarterly data published within the Quarterly Individual Insolvencies series, and comparisons of monthly numbers are unreliable.

In order to continue to provide timely, yet less volatile, information on IVAs, three-month rolling averages were calculated to smooth out the underlying data and present the overall direction of monthly trends. However, these statistics should still be interpreted with caution. See Methodology section of the accompanying Monthly Statistics Methodology and Quality document for further detail.

6.4 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. There is an increased likelihood that published statistics for the most recent month will be revised in the future, because the data were only extracted approximately four working days after month end. Any future revisions will be marked with an ‘r’ in the relevant table.

Non-routine revisions since previous release

Compulsory liquidations can be annulled or rescinded following a court order. Previously published numbers included compulsory liquidations which had been subsequently annulled or rescinded. In this, and future releases, compulsory liquidations which have been annulled or rescinded in England & Wales have been removed. As a result of this change, 84 compulsory liquidations registered between 1 January 2019 and 31 March 2021 have been removed which were previously included.

7. Glossary

7.1 Key Terms used within this statistical bulletin

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.
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.
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.
Debt Relief Order (DRO)	A form of debt relief available to those who have a low income, low assets and less than £20,000 of debt. There is no distribution to creditors, and discharge from debts takes place 12 months after the DRO is granted.
Deed of Arrangement	An alternative way for a debtor to deal with their affairs than entering into bankruptcy or an individual voluntary arrangement. Deeds of arrangement require the approval of a simple majority of creditors in number and value, and do not require a nominee, report to court or a meeting of creditors to be held.
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.
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 Order	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 Appointment	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.
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.