Corporate insolvencies increased more than 37% in December, compared to November’s figure of 891, as personal insolvencies also began to rise.
In December 2020 there was a total of 1,228 company insolvencies, comprising 998 creditors’ voluntary liquidations (CVLs), 35 compulsory liquidations, 150 administrations and 45 company voluntary arrangements (CVAs).
For the first time since the first UK lockdown, year-on-year corporate insolvencies were higher than 2019’s figures, with December’s figures being 9.2% higher than the same month in 2019.
Colin Haig, president of insolvency and restructuring trade body R3, said: “These figures show that the economic impact of the pandemic may now finally be pushing increasing numbers of struggling businesses and individuals over the line into formal insolvency.
“It’s a question of when, not if insolvency numbers further increase this year – especially as the government’s support packages are due to start running out at the end of the first quarter. Even if the chancellor decides to extend them again, at some point they will have to come to an end.”
Haig explained that while it’s too early to judge the impact of the latest lockdown on businesses, it has further complicated an already muddy economic picture, and will likely have been an additional blow for firms which traditionally depend on a busy festive period.
Personal insolvencies also began to creep up with an increase of two percent to 9,518 in December compared to November, and were 13.4% higher than December 2019. The bulk of the total comprised IVAs.
Last month’s individual insolvencies figures comprised 1,241 debt relief orders and 807 bankruptcies. But on average, there were 7,918 IVAs registered in each of the three months to December 2020. This was 38% higher than the three-month rolling average of the same period in 2019.
Haig explained that the monthly rise in personal insolvencies was entirely down to IVAs, adding: “Although a number of people in the UK have saved money and repaid debts during the pandemic, others who haven’t been able to are struggling.”