An insolvency expert from top 20 UK business services firm Wilkins Kennedy says it is “worrying” that the number of people voluntarily making themselves insolvent in England and Wales is at its highest annual total on record.
The latest Insolvency Statistics published for Q4 from October to December 2018 reveal the total individual insolvencies increased to their highest level since Q2 in 2010 due to Individual Voluntary Arrangements (IVAs) rising to a record high quarterly level.
Total insolvencies increased for the third consecutive year to 115,229, the highest since 2011 which was mainly due to the increases in IVAs reaching their highest annual total on record.
Louise Brittain, Partner and Head of Contentious Insolvency at Wilkins Kennedy – which has 18 offices throughout the South East of England – said: “The increase in Individual Voluntary Arrangements (IVAs) shows that people are more financially aware and seeking help with their debts in a more timely manner.
“The fact that bankruptcies are lower than IVAs is indicative of the cost of making someone bankrupt which has risen significantly in the last two years.
“I think it is worrying that more people are in financial distress because the total number of insolvencies has reached figures we have not seen before.
“The High Street is suffering because people’s disposable income is being reduced by rising costs elsewhere, such as rising commute costs.”
The report also highlighted that the underlying number of company insolvencies increased in 2018 to 16,090, the highest level since 2014.
All types of company insolvency increased in 2018 compared with to the previous year except administrative receivership.
Louise added: “It is very worrying that the number of company insolvencies is at its highest level since 2010. More creditors are forcing companies into liquidation by quite a sizeable amount which means less directors are taking a financial hit.
“However the rise in Administration shows that directors are trying to take pre-emptive action to sell their business but clearly when that isn’t possible they are waiting for creditors to take action”.
Wilkins Kennedy is part of the CogitalGroup – an international business services group with annual revenues in excess of £450m, employing around 6,000 people across 176 offices.