The latest insolvency figures show that corporate insolvencies in England and Wales increased by 25% when compared to June 2020, but are 34% lower than in July 2019.
In July, there was a total of 955 company insolvencies in England and Wales, comprised of 590 creditors’ voluntary liquidations (CVLs), 166 compulsory liquidations, 182 administrations and 17 company voluntary arrangements (CVAs).
The Insolvency Service, which compiles the figures, explained that the overall reduction in company insolvencies when compared to last year is likely to be driven by the range of government support put in place in response to the pandemic.
Compulsory liquidations increased to the highest monthly level since lockdown began, and the Insolvency Service attribute this to the HM Courts and Tribunals Service resuming processing of a backlog of petitions following reduced operations during lockdown.
Personal insolvencies remained low in July 2020, with a 31% reduction in debt relief orders (DROs) to 1,621, and a 38% fall in bankruptcies to 913 compared to July 2019. This fall coincides with the announcement of enhanced government financial support for individuals and businesses to aid the impact of the pandemic.
Individual voluntary arrangements (IVAs) have been calculated using a three-month rolling average to smooth data after recent statistics have been affected by technical issues experienced by an IVA provider. On average, there were 7,311 IVAs registered in each of the three months ending July 2020. This is the same rolling average as the equivalent three-month period ending July 2019.
Colin Haig, president of the insolvency and restructuring trade body, R3, said: “Although overall numbers remain low in comparison to the same time last year, this uptick could suggest that the pandemic might now be starting to be seen in the insolvency figures.
“All the signs point to a tough road ahead. The UK has entered a recession, consumer confidence is low, and a number of big-name brands have entered the insolvency or restructuring procedures. This suggests the business climate will be challenging in the foreseeable future – and will not be made any easier as the government support packages begin to wind down.”