UK company insolvencies rise 9% in December 2020; individual insolvencies declines
In December 2020, UK company insolvencies for the first time were higher than the comparable month in 2019 since the start of the first lockdown. There were a total of 1,228 registered company insolvencies, comprised of 998 creditors’ voluntary liquidations (CVLs), 35 compulsory liquidations, 150 administrations and 45 company voluntary arrangements (CVAs). There were no receivership appointments. During the same month in 2019, UK company insolvencies were 9% lower than in December 2020.
When compared with the number of UK company insolvencies registered in December 2019, compulsory liquidations were 80% lower; CVLs were 26% higher, there were twice as many CVAs, and administrations were 7% higher.
This is the first month in which overall UK company insolvency registrations have been higher than the comparable month in 2019 since the start of the first UK lockdown, although statistics for individual months have more potential for volatility. “It is too soon to tell whether this represents an emerging trend and it should be noted that the numbers of company insolvencies registered in December 2019 were themselves low compared to all other months in the year,” The UK Insolvency Service said in a statement today.
The Insolvency Service will publish further analysis of longer-term trends in the quarterly statistics for Q4 2020 on 29th January 2021.
Since the start of the first lockdown the overall numbers of UK company insolvencies have remained low. The overall reduction in company insolvencies is likely to be in part driven by the range of government support put in place to financially support to companies in response to the coronavirus (COVID 19) pandemic.
Between the 26 June and 31 December, four companies obtained a moratorium and two companies had a restructuring plan sanctioned by the court. These two new procedures were created by the Corporate Insolvency and Governance Act 2020. The low number of cases of each of these new legislative tools since the Act came into force is likely to be as a result of the range of Government support provided to companies as mentioned above, including the range of temporary measures that have recently been extended for a further period.
Individual Insolvencies
There were 1,241 Debt Relief Orders (DRO) and 807 bankruptcies in December 2020 in UK. The numbers of DROs and bankruptcies in December 2020 were 40% and 26% lower respectively than in December 2019. Debtor applications were 20% lower and creditor petitions were 60% lower.
Also Read: US Bankruptcy filings drop 30% in 2020
The lower numbers of DROs and debtor applications correspond with a reduction in applications for these services, which coincided with the announcement of enhanced government financial support for individuals and businesses since the emergence of the coronavirus pandemic, says a statement from the UK Insolvency Services.
A debt relief order is a way to have your debts written off if you have a relatively low level of debt and have few assets.
