Total personal insolvencies increased eight percent to more than 10,300 during April, compared to the same month last year, driven largely by a near 40 percent surge in IVAs.
Official statistics released today (May 15) by The Insolvency Service, which administers the insolvency regime in England and Wales, show there were 10,397 individual insolvencies in April across England and Wales.
The figures reveal a 39 percent surge in IVAs, to 8,093, compared with April 2019. The Insolvency Service said most IVAs are supervised by licensed insolvency practitioners working for firms that specialise in this area and that in some cases, this leads to a more volatile time series.
The government agency explained that changes in monthly volumes may be due in part to how promptly and frequently IVAs are registered by providers with the Insolvency Service.
Other than IVAs driving up the increase in April, there was considerable variation across other types of individual insolvencies. The 10,397 April total also included 1,496 debt relief orders (DROs) and 808 bankruptcies - the latter comprised 784 debtor bankruptcies and 24 creditor bankruptcies.
Overall, bankrupties fell 46 percent on April 2019. This was driven by a 34 percent fall in debtor bankruptcies and a 92 percent drop in creditor bankruptcies.
A 37 percent drop in DROs was also registered, compared with April 2019.
Commenting generally on the figures, which are now being produced monthly instead of quarterly, The Insolvency Service said the volume of new company and individual insolvencies increased for most insolvency types in April 2020, when compared with pre-lockdown March figures.
Overall numbers of company and individual insolvencies dropped in the days immediately after the UK lockdown was applied on March 23. The Insolvency Service said this is likely a result of a combination of factors including:
* The Courts & Tribunals Service reducing the operational running of courts;
* HMRC reducing enforcement activity;
* The Insolvency Service, insolvency practitioners and Companies House having to adjust to new working arrangements;
* Delays in documents being provided to Companies House by insolvency practitioners.
The Insolvency Service said it does not record where particular insolvencies relate to the coronavirus pandemic, and it was therefore not possible to state its direct effect on insolvency volumes.
Christina Fitzgerald, vice president at insolvency trade body R3, said the first monthly insolvency figures do not yet provide a clear picture of how the pandemic is affecting insolvencies. She added however that monthly stats will give more immediate feedback on how businesses, consumers and the wider economy are being affected.
She added: "There was a significant month-on-month increase in individual insolvencies, largely driven by a doubling of numbers of IVAs."