The number of registered insolvencies in July 2021 was 1,094 in England and Wales, according to the Insolvency Service’s latest figures.
This figure is 13% higher than the 965 reported in July 2020, but 24% lower than the number registered pre-pandemic two years ago (1,442 in July 2019).
In July 2021 there were 1,007 Creditors’ Voluntary Liquidations (CVLs), similar to pre-pandemic levels. For individuals, 620 bankruptcies were registered, 34% lower than July 2020 and 58% lower than July 2019.
DROs rise while IVAs fall
The number of Debt Relief Orders (DROs) in July 2021 was at its highest level since the start of the pandemic, with 1,864 DROs registered. This was in part due to changes to the eligibility criteria in June, which saw an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000.
Meanwhile, the number of DROs registered was 15% higher than July 2020 but remained lower than pre-pandemic levels (22% lower than in July 2019).
There were, on average, 6,841 Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending July 2021, which is 7% lower than both the three-month period ending July 2020 and the three-month period ending July 2019.
Between the launch of the Breathing Space scheme on 4 May 2021, and 31 July 2021, there were 17,297 registrations, comprised of 17,098 Standard breathing space registrations and 199 Mental Health breathing space registrations.
Covid support has kept insolvencies low, but July proved ‘challenging’
Since the start of the first UK lockdown, as a response to the coronavirus pandemic in March 2020, overall numbers of company and individual insolvencies have remained low when compared with pre-pandemic levels. This is likely to be partly driven by government measures put in place to support businesses and individuals during the pandemic, including:
- Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).
- Enhanced government financial support for companies and individuals.
Colin Haig, President of insolvency trade body R3, said: “Although government support has continued to provide a lifeline for many businesses which would have otherwise struggled in an economic climate like this, this July was still a challenging month.
Future looks ‘optimistic’, but caution urged
He added: “With the opening up of the economy, consumer confidence at pre-pandemic levels, and spending levels higher than they were in 2019, the future does look more optimistic. Having said that, it will take longer for the worse-hit sectors to recover from the pandemic.
“SMEs are the backbone of the UK economy, but many have been badly affected by the pandemic. The restructuring community is better placed than ever to help them and other organisations with financial worries, but if directors leave it too late to ask for help, they will have fewer rescue or recovery options open to them.”
Source: Accounting Practice