Insolvency numbers up 13% this July

This is however 24% lower than the 1,442 figure registered in July 2019. This overall reduction was driven mostly by the lower number of compulsory liquidations. 

There were 1,007 creditors’ voluntary liquidations in July 2021 - which was similar to pre-pandemic levels. As for individuals, there were 620 bankruptcies registered - 34% lower than July 2020 and 58% lower than July 2019.  

The number of debt relief orders (DROs) handed out in July 2021 were, however, at their highest level since the start of the pandemic - with 1,864 DROs registered. This followed on from the changes in the eligibility criteria on 29 June, including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000. 

Commenting on the news, insolvency trade body R3’s president Colin Haig said: “Although government support has continued to provide a lifeline for many businesses which would have otherwise struggled in an economic climate like this, this July was still a challenging month. 

“With the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than they were in 2019, the future does look more optimistic. Having said that, it will take longer for the worse-hit sectors to recover from the pandemic. 

“SMEs are the backbone of the UK economy, but many have been badly affected by the pandemic. The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.” 

As for individual voluntary arrangements, there were on average 6,841 registered per month in the three-month period ending in July 2021. This is 7% lower than both the three-month period ending in July 2020 and July 2019. 

Overall, since the start of the first UK lockdown in March 2020, overall numbers of company and individual insolvencies have remained low 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. 

Haig added: “While the majority of Covid support measures are coming to an end, the introduction of the Breathing Space scheme in May has given more than 17,000 people who are in financial difficulty the chance to discuss the challenges they face with a debt advisor, free from creditor action, since it launched.

“This recent development may be a further support for those who suffered financially during the pandemic. As we enter the middle of the summer, employment numbers and job vacancies have increased, and more people are returning to work as the furlough scheme begins to wind down. 

“However, not everyone has benefitted from government support, and many people have had to borrow or use their savings to pay their bills. We recognise that there are a huge number of people who are worried about their finances right now, and the best thing they - or anyone who is worried about their personal or business finances - can do is to seek advice.”