The figures for December 2020 begin to suggest that the pandemic might finally be having an adverse effect on the number of insolvencies, after an extended period earlier in the year when the government’s support schemes may have diluted the financial impact of Covid-19.
During December there were 1,228 company insolvencies in England and Wales, an increase of 37% compared to November’s 891. The total was also 9.2% higher than the number recorded in December 2019, and this is the first occasion on which there has been an increase when compared to the same month in the previous year since the lockdowns commenced in the UK.
The company insolvencies comprised 998 creditors’ voluntary liquidations (CVLs), 35 compulsory liquidations, 150 administrations and 45 company voluntary arrangements.
The 9,518 personal insolvencies in December 2020 were 2% higher than the figure for November 2020 and represented an increase of 13.4% from the levels seen in December 2019.
The insolvencies included 1,241 debt relief orders (DROs) and 807 bankruptcies.
In the last three months of 2020, there were an average of 7,918 Individual Voluntary Arrangements (IVAs). This figure is as much as 38% higher than in the final quarter of 2019.
Colin Haig, president of insolvency and restructuring trade body R3, said:
“These figures show that the economic impact of the pandemic may now finally be pushing increasing numbers of struggling businesses and individuals over the line into formal insolvency.
“It’s a question of when, not if insolvency numbers further increase this year – especially as the government’s support packages are due to start running out at the end of the first quarter. Even if the chancellor decides to extend them again, at some point they will have to come to an end.”
Regarding the personal insolvencies increase, he commented:
“Although a number of people in the UK have saved money and repaid debts during the pandemic, others who haven’t been able to are struggling.”
In December 2020 there were 57 company insolvencies registered in Scotland, 36% lower than in December 2019. The 57 insolvencies comprised 21 compulsory liquidations, 25 CVLs and 11 administrations.
The month saw 645 personal insolvencies in Scotland, a reduction of 40% when compared to 12 months previously.
In December 2020 there were nine company insolvencies registered in Northern Ireland, 79% lower than in December 2019. The nine insolvencies consisted of five CVLs, three CVAs and one compulsory liquidation.
In December 2020 there were 156 individual insolvencies in Northern Ireland, 17% lower than December 2019. The 156 insolvencies consisted of 132 IVAs, 15 DROs and nine bankruptcies.