Monthly insolvency statistics – April 2024

Corporate Insolvencies

England and Wales

Interestingly, company insolvencies in England and Wales bounced up again in April 2024 by 18% compared to March 2024 (also 18% higher than April 2023). We have been seeing large fluctuations on a monthly basis for the last 12 months, however, the trend on an average basis appears fairly steady over the last few months, neither increasing nor decreasing. Whilst company insolvencies recently haven’t reached the highest monthly volume seen following the financial crisis in 2008-9, the monthly volumes more recently have stayed at a high level for a longer period.

We always comment on the monthly statistics as they are absolute figures, however it’s also important to take those monthly figures in context. Thankfully the Insolvency Service has provided data that allows us to compare the rate of insolvency, that is, the number of company insolvencies compared to the number of companies on the Companies House effective register. In the 12-month period to 30 April 2024, 57.0 companies in every 10,000 companies entered insolvency. This is significantly lower than the peak of 113.1 per 10,000 companies during the 2008-9 recession. Since that time, the number of companies on the effective register has more than doubled.

It will surprise no one that the construction industry is seeing the highest number of insolvencies at 17% of total cases, closely followed by wholesale and retail trade (16% of total cases).

Creditors’ voluntary liquidations (CVLs) continue to show volatility on a monthly basis; 18% higher in April 2024 than March 2024. This is following a year (2023) which broke records for the number of CVLs in any year, since records began in 1960 (but bear in mind how many more companies there are on the effective register now). CVL numbers have been driving the overall number of company insolvencies.

The number of compulsory liquidations was 11% higher than in March 2024. It remains to be seen whether 2024 sees a return to pre-pandemic levels of compulsory liquidations across the year, as neither 2022 nor 2023 reached that point.

Administrations returned to their high-level trend after a notable dip last month, being 36% higher in April 2024 than March 2024, and 25% higher than April 2023.

CVAs remain at a lower level compared to the pre-pandemic period, however, April 2024 figures were much higher than seen in recent times, being double the number seen in March 2024. With low absolute numbers (18 in April 2024) it doesn’t take many cases to create such a swing.

Scotland

Company insolvencies in Scotland totalled 109, which was 4% lower than April 2023. Scottish company insolvencies continue to trend at a higher level than prior to the pandemic. The biggest change has been the relative increase in CVLs compared to compulsory liquidations, meaning that CVLs are now the most common form of company insolvency.

Northern Ireland

Company insolvencies on Northern Ireland totalled 33, which was more than 3 times as many as in April 2023.  This marks 8 months of substantially higher numbers of insolvencies than seen since the start of the pandemic, albeit Northern Ireland has yet to return to the number of insolvencies seen prior to the pandemic.

Personal Insolvencies

England and Wales

Total individual insolvencies in April were 9,651, which was notably higher than the March 2024 figure (8,782) and also up on April 2023 numbers (9,222).

This upward trend was driven by the significant increase in Debt Relief Orders (DRO’s) in April 2024 (3,436), stemming from the elimination of the £90 administration fee in order to obtain a DRO. This is a steep rise from March 2024 (2,708), and April 2023 (2,631).

With DRO’s now increasingly being the debt solution of choice for many, bankruptcy numbers have deceased slowly since the DRO criteria was changed in May 2021, with the total number of bankruptcies in Apil 2024 (648), being similar to numbers over the last 9 months, though still significantly lower than pre-covid levels.

In April, there were 120 creditor petitions, with HMRC leading the push on filing petitions. However, this monthly figure is notably down on the monthly average of 141 in 2023.

Debtor’s bankruptcy applications reached 528 in March 2024 compared to 459 in the same month last year, showing a steady increase over the last 12 months, slightly up on the monthly average of 500 in 2023.

Individual Voluntary Arrangements (IVA) numbers over the past year have been significantly lower than during 2022, which saw a record annual number. 5,567 IVA’s were recorded in April 2024, which was down on April 2023 numbers (5,996).

IVA’s which were previously sold inappropriately will now likely be replaced by DRO’s, which will see IVA numbers drop even further, as DRO’s continue to rise, and bankruptcy numbers remain constant.

Breathing Space (BS) registrations in April 2024 reached 7,649, compared to 6,631 in April 2023. Registrations consisted of 102 Mental Health BS applications, and 7,547 Standard BS registrations, compared to the 2023 monthly average of 7,244.

An increase in BS applications looks to be continuing in 2024, however, this procedure is merely a pause in the process and the individuals concerned will still have to deal with their indebtedness, although what course of action they take will remain to be seen.

The numbers suggest that those exiting a Breathing Space (BS) application are being sign-posted to a DRO as their chosen exit route once the BS period had expired.

Plans to modernise the current Personal Insolvency framework could result in a single gateway to enable people to access independent, regulated debt advice, via a digital platform, or dovetailed with the current Breathing Space scheme, which may see the removal of barriers into appropriate and regulated insolvency procedures, providing a way out of debt, which will provide equally good outcomes for creditors where possible.

Scotland

The Accountant in Bankruptcy produces individual insolvency statistics on a quarterly basis. Therefore, the numbers in this section are only updated once every 3 months.

In Q1 2024, there were 1,884 individual insolvencies in Scotland, which was slightly lower than in Q1 2023. These were comprised of 1,281 trust deeds and 603 sequestrations, of which 343 were via the minimal asset process (MAP) route.

The table of sequestrations shown below contains all sequestrations with the numbers of MAPS separated out in the second table.

Northern Ireland

In April 2024 there were 112 individual insolvencies in Northern Ireland, the same as April 2023. This consisted of 84 IVAs, 20 bankruptcies and 8 DROs.