Monthly insolvency statistics – September 2022

Corporate Insolvencies

Company insolvencies at 1,679 have dipped slightly in September compared to the highs seen over the summer, returning to a level seen in May this year. Overall, company insolvencies were 11% higher than the same month in 2019 (pre-pandemic) and this increase remains driven by creditors’ voluntary liquidations (CVLs). Anecdotally, these CVLs consist of a large number of companies who had taken Bounce Back loans during the pandemic with or without any real prospect of being a trading entity, but which are now being liquidated as repayments fall due.

Other company insolvency types have yet to return to pre-pandemic numbers, although these are expected to rise through the end of 2022 and into 2023.

England and Wales

The number of CVLs in September was 1,379, which is 25% higher than September 2019 (and 4% higher than September 2021), although this is a decrease of 17% on the prior month of August 2022.

Compulsory liquidations jumped by 36% in September to 204 cases, compared to August, however even with this increase, they have not matched pre-pandemic volumes (being 10% lower than September 2019). The increase of 538% compared to September last year (2021) does reflect the unwinding of Government support and a hardening attitude from HM Revenue & Customs (HMRC) and suppliers.

Administrations have not yet returned to their pre-pandemic levels; 85 were recorded during September 2022, which is 5% higher than the same month last year, but still a significant 47% down in September 2019. The reasons for this continued depression in Administration levels are not immediately clear; Government support schemes have been withdrawn, interest rates are rising, and staffing pressures and costs are well-documented. Perhaps we are seeing the impact of a more collaborative approach to companies managing their debt burdens, for example landlord and tenant negotiations. In addition, longer-term finance such as HMRC Time To Pay arrangements and CBILS loans repayments will continue for years, in many cases, and difficulties meeting commitments may be yet to rear their head.

Company voluntary arrangements remain at a steady trend of around 50% of pre-pandemic numbers. 11 were recorded in September 2022, compared to 22 in September 2019, and 12 for the same month last year.

Scotland

In Scotland, the number of company insolvencies in September 2022 was 103, which is 36% higher than September 2019. Much like England & Wales, this is being driven by higher numbers of CVLs (69 for the month, 146% higher than the same month pre-pandemic).

Northern Ireland

In Northern Ireland, despite a significant increase in September 2022 compared to August 22, company insolvencies at 22 for the month are still some 39% lower than pre-pandemic and the monthly trend remains well below pre-pandemic. 

Personal Insolvencies

England and Wales

Personal insolvency numbers continue to remain flat and show no real signs of increasing at the same rates as company insolvencies, particularly CVLs, 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 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 5,400 per month since inception, and September saw another upturn in 6,177 applications being made.

92 Mental Health BS applications were made in September, against a similar monthly average, and 6,085 Standard BS applications were made, against a 12-month average of 5,412.

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

There has been on average 7,340 Individual Voluntary Arrangements (IVA’s) in the 3-month period ending August 2022 and then 7,666 recorded in September, but IVA’s have fluctuated between around 6,300 and 7,800 per month for some time and September may 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 Debt Relief Order (DRO), they have averaged around 2,005 per month, with the September figure of 1,812 representing a slight reduction.

A “new” DRO would have previously been a bankruptcy and therefore, the DRO and bankruptcy graphs travelling in diverging directions is no real surprise. In September, there were only 535 bankruptcies, against a 12-month average of 577.

Bankruptcies are at historical lows and the flat trend in debtors making their own bankruptcy application in September (432 against a 12-month average of 485) 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. In September there were 103 creditors’ petitions, which is slightly up on the 12-month average of 92.

One noticeable element to the creditor petition statistics is that HMRC have now crept to the top of the table of volume bankruptcy petitioners, which reflects the Government’s intentions in relation to recovery of unpaid tax. Although corporate entities who are engaging with HMRC appear to be obtaining generous time to pay arrangements, individuals who are not engaging appear to be facing no nonsense enforcement.

Northern Ireland

In August 2022 there were 125 individual insolvencies in Northern Ireland, 16% lower than in August 2021, but 39% lower than August 2019. This consisted of 111 IVAs, 10 DROs and four bankruptcies.