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|Insolvency Statistics – July to September 2015 (Q3 2015)|
|Thursday, 29 October 2015|
This statistics release contains the latest data on company insolvency (companies which are unable to pay debts and enter liquidation, or enter administration or other company rescue process) and individual insolvency (people who are unable to pay debts and enter formal procedures).
Main messages Companies
- The number of company insolvencies in England and Wales continued to decrease.
- This decrease was mainly driven by a decrease in compulsory liquidations, which fell to the lowest level since Q3 1989. People
- The total number of people who became insolvent in England and Wales decreased compared with the same quarter in 2014, but increased compared with the previous quarter.
- This quarterly increase was driven by a rise in individual voluntary arrangements, the first such increase since Q2 2014.
- The number of bankruptcies and debt relief orders continued to decline.
Key findings for Q3 2015
- Company insolvencies continued to decrease - An estimated total of 3,539 companies entered insolvency in Q3 2015, which was 4.4% less than Q2 2015 and 10.2% lower than Q3 2014.
- Compulsory liquidations decreased to their lowest level since Q3 1989 - A total of 612 companies were subject to a compulsory winding-up order in Q3 2015, a 20.4% decrease on the previous quarter and 29.2% lower than Q3 2014. This was the main driver of the decrease in total company insolvencies.
- Creditors’ voluntary liquidations have been decreasing since Q2 2013 - An estimated 2,451 companies entered creditors’ voluntary liquidation in Q3 2015, a 0.7% decrease on the previous quarter and 4.3% lower compared to the same period in 2014.
- Administrations and CVAs decreased on the year. - There were an estimated 363 administrations in Q3 2015, a decrease of 2.4% compared to the previous quarter and 5.5% lower than the same quarter last year. There were an estimated 111 CVAs in Q3 2015, an increase of 32.1% on the previous quarter and 14.6% lower than Q3 2014. There was an estimated one administrative receivership.
- The liquidation rate was at its lowest level since comparable records began - The estimated liquidation rate in the 12 months ending Q3 2015 was 0.46% of active companies, the lowest level since comparable records began in Q4 1984.
Individual insolvency in England and Wales
Individual insolvencies increased for the first time since Q2 2014 - There were a total of 19,683 individual insolvencies in Q3 2015, 2.8% higher than Q2 2015 but a decrease of 18.5% compared to Q3 2014.
This was driven by an increase in individual voluntary arrangements - There were 10,197 IVAs in Q3 2015, which was a 9.3% increase compared to Q2 2015 but 17.9% lower than Q3 2014.
The number of bankruptcies was at the lowest level since Q4 1990 - There were a total of 3,857 bankruptcy orders in Q3 2015, 3.3% lower than Q2 2015 and 21.4% lower than Q3 2014. The number of bankruptcy orders has been on a decreasing trend since 2009. However, the introduction of debt relief orders (DROs) in 2009 is likely to have affected the number of bankruptcies.
The number of DROs was at the lowest level since Q4 2009 - There were 5,629 DROs in Q3 2015, which was a 3.5% decrease compared to Q2 2015 and 17.3% lower compared to the same period in 2014.
The rate of insolvency decreased - In the 12 months ending Q3 2015, 1 in 550 adults (0.18% of the adult population) became insolvent. This was the lowest rate since the 12 months ending Q4 2005.
Company insolvency in England and Wales
In the third quarter of 2015, there were an estimated 3,063 company liquidations – a 5.4% decrease on the previous quarter and 10.6% less than in Q3 2014.
There were an estimated 2,451 creditors’ voluntary liquidations (CVLs) in Q3 2015, a decrease of 0.7% on the last quarter, 4.3% lower than the same period a year ago and the lowest since Q2 2008.
In July to September 2015 there were 612 compulsory liquidations, a decrease of 20.4% on the previous quarter, and down 29.2% compared with the same quarter in 2014. The number of compulsory liquidations was at the lowest quarterly level since Q3 1989.
In the third quarter of 2015, an estimated 157 companies entered creditors’ voluntary liquidation following administration, a decrease of 28% on the same quarter of 2014.
The peak in the number of companies entering creditors’ voluntary liquidation following administration was seen in early 2010. This is in contrast to the peak of liquidations as a first insolvency procedure, which was in 2009. This is because the usual length of an administration is one year (though it can be extended for a further six months), and the number of administrations peaked in late 2008 / early 2009 (section 2.2).
Company liquidations may be expressed as the percentage of active companies, as this takes into account changes over time in the underlying population. As liquidation is a final procedure, meaning there is no risk of double counting companies, creditors’ voluntary liquidations following administration are included in the total liquidation rate.
In the 12 months ending Q3 2015, an estimated 1 in 216 active companies (or 0.46% of all active companies) went into liquidation, down from 1 in 206 in the 12 months ending Q2 2015, and 1 in 184 in the 12 months ending Q3 2014. This continues the downwards trend in the rates from 2011. The liquidation rate was at its lowest level since comparable records began in 1984.
Changes in company liquidation rates are related to economic conditions: in periods of economic growth, liquidation rates tend to decrease. The liquidation rate peaked at 2.6% (24,400 companies) in the year ending March 1993, over a year after the end of the 1990s recession. The next sustained increase in the rate coincided with the 2008-09 recession, when 0.9% (20,500 companies) entered liquidation in the year ending December 2009.
Although the number of liquidations was slightly higher in 1993 than in 2009, the rate of liquidations was substantially higher in 1993. This is because the number of active companies more than doubled over this period, so a much smaller proportion of the total number of companies entered liquidation in 2009.
Administrations, company voluntary arrangements, and receiverships
In Q3 2015 there were an estimated 363 administrations, 2.4% lower than Q2 2015 and 5.5% lower than the same period in 2014.
There were an estimated 111 company voluntary arrangements (CVAs) in Q3 2015, 32.1% higher than Q2 2015 but 14.6% lower compared to Q3 2014.
In Q3 2015 there was one administrative receivership. Since 2012 there have tended to be fewer than ten cases per quarter, because use of this procedure is restricted to certain types of company or to floating charges created before September 2003.
Total new company insolvencies by industry
These statistics provide a breakdown of company insolvencies by industry, using the Standard Industrial Classification 2007 (SIC2007) – a harmonised set of industry classifications used in other UK Official Statistics. The Excel file which accompanies this release contains equivalent data broken down by type of company insolvency, and for trading-related bankruptcies, in England and Wales. It also includes industry breakdowns for company insolvencies in Scotland.
These statistics are presented with a lag of one quarter, because it allows time for more complete data to be collected by industry.
As Figure 7 shows, in the twelve months ending Q2 2015, the highest number of new company insolvencies was in the construction sector (2,600 – down 3.6% from the 12 months ending Q1 2015).
The second highest number of new company insolvencies was wholesale and retail trade sector with 2,258 new company insolvencies in Q2 2015, which was a decrease of 1.4% compared to the 12 months ending Q1 2015.
In Q2 2015 the five industry sectors with the highest number of new company insolvencies were ‘construction’; ‘wholesale and retail trade; repair of motor vehicles and motorcycles’; ‘administrative and support service activities’; ‘accommodation and food service activities’ and ‘manufacturing’. These five have had the highest numbers of insolvencies (though sometimes in a different order) each quarter since the 12 months ending Q1 2012.
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