Monthly insolvency statistics – August 2024

Corporate Insolvencies

England and Wales

 Total corporate insolvencies in August were 1,953.  This was 9% lower than the previous month (2,144 in July 2024) and 15% lower than August 2023.  The number of company insolvencies continued to be higher than in the Pre Covid-19 pandemic period and even in the five years previous to that.

The increase in insolvencies continues to be attributed to the unwinding of the government COVID-19 support packages as businesses struggle to repay borrowings together with the impact of higher interest rates and energy costs with the construction, retail and hospitality industries in particular, continuing to struggle.

It will be interesting to see how the impact of the administration of the UK operations of the ISG Group may have a ripple effect throughout the construction industry and whether this will result in an increase the insolvency levels over the coming months, in the run up to the end of the year.

Creditors Voluntary Liquidations (“CVLs”) totalled 1,542 making up 79% of all corporate insolvencies registered in August.  This was a 7% decrease on the July figures and a 15% decrease on the same month last year.

Compulsory Liquidations (“WUCs”) were 12% lower than the previous month with 279 appointments however, still higher than August 2023 with a 6% increase on those levels.

Administration appointments totalled 112 which was 25% lower than in July 2024 and 40% lower than the same month in 2023.  Following an increase in appointments during the past two years, the current levels have now settled down and are in line with those seen between 2015 and 2019.

CVAs saw a comeback this month compared to the same month last year with a total of 20 arrangements being approved (82% increase) however, this was slightly down on July 2024 (20% reduction).  The continued low level of CVA’s is impacted by the prevalence of restructuring plans that are continuing to be used as a viable alternative.

Scotland

In August 2024 there were 102 company insolvencies registered in Scotland, 9% lower than August 2023 and similar levels to January 2019. There were 42 compulsory liquidations, 56 CVLs, two administrations and two receiverships. There were no CVAs approved.

Northern Ireland

In August 2024 there was an 8% decrease in company insolvencies compared to the same month in the previous year with 11 company insolvencies registered in Northern Ireland. This is comprised of nine CVLs, one compulsory liquidation and one CVA.  There were no administration nor receivership appointments.

Personal Insolvencies

England and Wales

There were 10,000 individual insolvencies in August, an increase of 16% on August 2023 (8,652) and very similar to the numbers seen last month.

The last five months have recorded the five highest Debt Relief Orders (DRO’s) since their introduction in 2009, with 4,166. This comes after the removal of the £90 administration fee in April 2024, and the eligibility criteria changing in June 2024, allowing liabilities of £50,000 (previously £30,000).

Given the recent threshold changes to DRO eligibility, creditors may have concerns that the process is susceptible to abuse. It will require careful monitoring by the authorities to ensure that creditors are protected from such abuse.

The permitted car value has also doubled, effective from 28 June 2024. Previously, if your car was valued at more than £2,000, you would not be eligible for a DRO, however, the value has been increased to £4,000. There have been some issues with the second-hand car market being so buoyant, meaning that modest car values are sometimes struggling to come in below £4,000, but that does not seem to have dampened the number of applications.

With DRO’s now increasingly being the debt solution of choice for many, bankruptcy numbers have deceased, with the total number of bankruptcies in August (594), being notably lower than the last 12-month average (674), and still significantly lower than pre-covid levels.

In August, there were 140 creditor petitions, with HMRC leading the push on filing petitions, showing a slight decrease on the previous 12-month average of 154.

Debtor’s bankruptcy applications reached 454 in August, compared to 521 in the same month last year. Debtor’s applications have remained steady in 2024, with the monthly average of 508 to date this year. However, many of those with liabilities between £30,000 and £50,000 will now turn increasingly to DRO’s and debtor’s applications will decrease over time as a result.

Individual Voluntary Arrangements (IVA) numbers over the past year have been significantly lower than during 2022, which saw a record annual number. However, 5,240 IVA’s were recorded in August, which is similar to the number recorded in the same month last year (5,186).

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 August 2024 reached 7,256, compared to 7,605 in August 2023. Registrations consisted of 118 Mental Health BS applications, and 7,138 Standard BS registrations.

BS applications appear to have levelled out, 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 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 BS scheme, which may see the removal of barriers into appropriate and regulated insolvency procedures.

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 Q2 2024, the individual insolvencies were comprised of 1,348 protected trust deeds and 708 bankruptcies (also known as sequestration), of which 389 went into bankruptcy via the minimal asset process route. The rules regarding bankruptcy differ to these in England and Wales, so numbers of bankruptcies are not directly comparable.

Northern Ireland

In August 2024, there were 90 individual insolvencies in Northern Ireland. This was 35% lower than in August 2023. There were 67 IVAs, 6 bankruptcies and 17 DROs.