UK Insolvency Statistics: 2019 - Kuits Solicitors Manchester

UK Insolvency Statistics: 2019

UK Insolvency Statistics: 2019

6th February 2020 - Published by

Last week, the Insolvency Service released the statistics for Q4 2019 (October to December), including a review for 2019 as a whole. Here, Head of Restructuring & Insolvency for Kuits, Richard Palmer, gives his expert insight into what they mean for businesses.

Corporate Insolvency
The total number of corporate insolvencies in England and Wales (17,196) was its highest since 2013. There was a notable increase in the number of creditors’ voluntary liquidations (8.2%) and administrations (a staggering 24%) over the year.

The number of CVAs remained consistent (355 in 2018; 351 in 2019) although the number decreases from Q1 to Q4 every year, so it is difficult to extrapolate trends. The recent clarifications in the Debenhams case may make CVAs compliant with that more palatable to landlords.

The Insolvency Service’s commentary notes over 3,000 insolvencies involving construction companies in 2019, illustrating the challenges in that sector as highlighted in our recent seminar. For previous articles please click here.

The corporate insolvency statistics are available here.

Individual Insolvency
The number of Individual Voluntary Arrangements grew substantially over 2019, although there was a noticeable decrease between Q3 and Q4. Numbers for bankruptcies and debt relief orders remained reasonably consistent (as they both have since 2014).

It is likely that consumer debt was the primary fuel of the number of IVAs, as wages were squeezed relative to inflation for the last decade. Whilst wages growth in 2019 (3.2%) significantly exceeded the Consumer Prices Index inflation level (1.4%), there were also approximately 1.15m County Court Judgments obtained against individuals who fell into debt, double the number in 2012.

The individual insolvency statistics are available here.

Considerations for the Future
The largest petitioner for winding up petitions against companies is already HMRC. HMRC is due to obtain “secondary preferential creditor” status in insolvency processes from April 2020, which may increase the number of petitions that it issues against its debtors, leading to a potential increase in the number of liquidations.

The substantial increase in the number of administrations may see the government again look at exercising its power to further regulate or impose conditions on sales to connected parties in administrations; this power expires on 26 May 2020.

Total unsecured personal debt in the UK is £225bn and has grown consistently throughout the last decade. It is certainly possible that the number of consumer insolvencies will continue to grow. However, total credit card debt has fallen for the first time since 2013 and “breathing space” legislation is due to come in to benefit consumers in 2021. Individuals benefitting from breathing space will be required to engage with professional debt advisers, so this may actually increase the number of individual insolvencies.

Subscribe to our mailing list