There were 2,384 seasonally adjusted corporate insolvencies in the first quarter of 2021, the lowest quarterly total on record, latest data shows.
This drop in corporate insolvencies is a reduction of 22% compared to the Q4 2020 figures of 3,053 and a fall of 38% compared to Q1 2020 (3,863).
The company insolvencies comprised of 2,047 creditors’ voluntary liquidations (CVLs), 108 compulsory liquidations, 192 administrations and 37 company voluntary arrangements (CVAs). There were no receivership appointments.
The Insolvency Service said this was driven by a drop in all company insolvency procedures. However, the number of corporate insolvencies between February and March this year increased.
Colin Haig, president of insolvency and restructuring trade body R3, said: “The quarterly fall in corporate insolvencies – to the lowest quarterly total on record – has been driven by a drop in all corporate insolvency processes. However, the increase in corporate insolvencies between February and March of this year suggests corporate insolvencies may now be on the rise.
“It’s clear government’s support measures are still helping to keep businesses going, but they have pushed back rather than prevented the financial pain of the pandemic from translating into a sharp, sustained increase in corporate insolvencies.”
Samantha Keen, UK turnaround and restructuring strategy partner at EY-Parthenon, said: “The decrease in company insolvency figures in the first quarter of 2021 is unlikely to cause a sigh of relief. This is a moment to take a breath before a predicted significant increase in the number of UK businesses entering some form of insolvency process as government support measures wind down.
“While 22% lower than Q4 2020, the Q1 2021 company insolvency figures showed a significant increase between February and March. This uptick could be the first indication of an upwards trajectory for the year.”
Personal insolvencies also dropped in Q1 2021, but only by five percent to 29,140 from 30,769 in Q4 2020.
There were 22,354 IVAs in Q1 2021, 4,143 DROs and 2,643 bankruptcies. The number of IVAs has risen by 26% since this time last year, but the number of DROs and bankruptcies have fallen by 40% since the first quarter of 2020.
Haig said: “It still is not entirely clear how the last three months of the pandemic are affecting individuals. It’s been a torrid twelve months for many people and their personal finances, and while IVAs tend to correlate to consumer debts, the gap in bankruptcies and DROs compared with this time last year means there may be more pain ahead if and when these figures start to revert to more ‘normal’ historical levels.
"Government programmes like the furlough scheme, and payment holidays on loans, mortgages and credit cards, have helped many people affected by the pandemic avoid insolvency.
“However, many private sector support schemes have ended, while the furlough scheme ends in September – and while many have been helped by furlough and debt repayment holidays, not everyone has been able to benefit from them.”