Company insolvencies fell by 43% compared with August last year, while bankruptcies and debt relief orders (DROs) also dropped substantially, according to the latest data from The Insolvency Service.
Bankruptcies dropped 43% on August 2019, while DROs fell 31% and on a three-month rolling average, IVAs dropped by 28% year-on-year.
In August, there was a total of 778 company insolvencies in England and Wales, comprised of 586 creditors’ voluntary liquidations, 66 compulsory liquidations, 110 administrations, 15 company voluntary arrangements and one receivership appointment.
According to The Insolvency Service, the overall reduction in company insolvencies was likely to be driven by the range of government measures to support companies during the coronavirus pandemic. The government also announced in late April that it would temporarily prohibit the use of statutory demands and certain winding-up petitions from April 27 to 30 June 2020. This was further extended to 30 September under the Corporate Insolvency and Governance Act.
The government also announced in late April that it would temporarily prohibit the use of statutory demands and certain winding-up petitions from 27 April to 30 June 20203 . This was further extended to 30 September under the Corporate Insolvency and Governance Act.
Colin Haig, president of insolvency and restructuring trade body, R3, said: “Despite today’s news, there is no question that the pandemic is taking its toll on businesses and individuals, but this impact is not being reflected in the insolvency figures, yet. With a number of temporary Government measures aimed at reducing insolvency numbers set to come to an end on 30 September, this situation may start to change before long.
“The government’s support measures have provided vital protection for businesses and consumers, but as they begin to wind down and this crucial safety net disappears, we expect to see more requests for personal and corporate insolvency advice and support.”
Haig added: “Our members are saying that requests for advice and support are becoming less restructuring-focused than they were at the start of the pandemic, and that enquiries for formal insolvency support are growing in volume, although they are still lower than might have been expected. Insolvency and restructuring professionals expect enquiry levels to grow as the furlough scheme ends, and when CBILS loans become due for repayment early next year.”