Monthly insolvency statistics – July 2022

Corporate Insolvencies

Total corporate insolvencies in July were 1,827. This bucks the recent trend of a slowdown in the number of corporate insolvencies and is 67% higher than July 2021 and 27% higher than July 2019 (a year before the COVID pandemic).  The statistics published by the Insolvency Service continue to show a return to insolvency levels significantly in excess of pre-pandemic levels. 

Creditors Voluntary Liquidations (“CVLs”) totalled 1,609 and were 60% higher than July 2021 and also 60% higher than in (pre-pandemic) July 2019. CVLs are the only corporate insolvency process showing an increase in July compared to June, which stands to reason as the pressure of energy prices, inflation, supply chain issues and difficulties recruiting are forcing companies to close

Compulsory Liquidations (“WUCs”) (132) continue to be significantly lower (47%) than they were pre-pandemic but 3 times higher when compared to July 2021. Since January 2022 there has been a sustained increase (average 122 per month) in WUCs when compared to the 7 months ended December 2021 (average 44 per month).

Administrations totalled 81 which is twice the number of Administrations as in May 2021 but 45% lower than pre-pandemic levels.  The number of Administrations has been consistent since May 2022. 

Company Voluntary Arrangements (CVAs) remain at low levels with only 5 registered in July 2022, this was slightly lower than July 2021 and around one-third of CVAs recorded in July 2019.  We have been expecting this decrease in CVA numbers, which is partly being caused by the return of Crown preference.

Scotland

In July 2022 there were 70 company insolvencies registered in Scotland, which was in line with June 2022. Company insolvencies in July 2022 were almost exactly the same in number as in July 2021 and 28% lower than the same month pre-pandemic. 15 Compulsory Liquidations, 55 CVLs and no Administrations. There were no CVA or receivership appointments. Scotland is now seeing similar levels of company insolvencies compared to this time last year and lower than this time of year pre-pandemic. 

Northern Ireland

In July 2022 there were 14 company insolvencies registered in Northern Ireland, 2.6 times as many as July 2021 but 33% lower than July 2019. This is comprised of 10 CVLs, 1 Compulsory Liquidation, 3 Administrations but no CVAs. Company insolvencies in Northern Ireland continue to remain lower than pre-pandemic levels.

Personal Insolvencies

England and Wales

Personal insolvency numbers continue to show no real signs of increasing at the same rates as corporate insolvencies, but this cannot be sustained for an indefinite period. With fuel and energy prices still volatile and the cost-of-living crisis taking effect, personal insolvencies are almost certain to rise in the coming months and show a more marked increase in the remainder of 2022 and into 2023.

It is interesting to see a distinction starting to develop between the frequency of use of the different personal insolvency solutions available to address problems of indebtedness.

For example, we can see that Breathing Space (BS) applications have hovered around 5,300 per month for the last year, and July saw an upturn to 6,112 applications being made.

118 Mental Health BS applications were made in July, against a 12-month average of 92, and 5,994 Standard BS applications were made, against an average of 5,200.

Those using BS may well be people with more pressing and immediate debts that elicit creditor pressure more quickly, such as rent and mortgage arrears.

There has been a 12-month average of 7,000 Individual Voluntary Arrangements (IVA’s) in the year to June and then 7,608 recorded in July, but IVA’s have fluctuated between around 6,300 and 7,800 per month and July could just represent one of the many minor peaks, rather than the beginning of a more permanent upward trend.

Following the changes in criteria from June 2021 allowing easier entry into a DRO, Debt Relief Orders (DROs) have averaged around 2,000 per month, with the July figure of 1,835 representing a slight reduction.

A “new” DRO would have previously been a bankruptcy and therefore, the direction of travel in opposite directions of the DRO and bankruptcy graphs is no real surprise. In July, there were only 531 bankruptcies, against a 12-month average of 591.

Bankruptcies are at historical lows and the decrease in debtors making their own application in July (461 against a 12-month average of 500) is a result of those who are now eligible to choose a DRO instead.

However, bankruptcy petitions will undoubtedly have to be issued to recover debts incurred during the pandemic and as a result of current economic pressures. We do expect to see creditor-driven bankruptcies begin to increase into 2023. However, this month there were only 70 creditors’ petitions, which is down on the 12-month average of 90.

Northern Ireland

In July 2022 there were 160 individual insolvencies in Northern Ireland, 13% higher than in July 2021, but 19% lower than July 2019. This consisted of 142 IVAs, 12 DROs and six bankruptcies.