2010 3rd Quarter Insolvency Statistics

05 NOV 2010

The Insolvency Service (IS) have published the third quarter insolvency statistics for 2010. They statistics, as always, make very interesting reading. As the IS note on the corporate side "there were 3,974 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the third quarter of 2010.  This was a decrease of 2.2% on the previous quarter and a decrease of 13.9% on the same period a year ago. This was made up of 1,126 compulsory liquidations... and 2,847 creditors voluntary liquidations ... Additionally, there were 1,141 other corporate insolvencies in the third quarter of 2010 (not seasonally adjusted) comprising 349 receiverships, 633 administrations and 159 company voluntary arrangements. In total these represented a decrease of 27.7% on the same period a year ago.  Within this, administrations were down 35.0%."

On the personal side (pictured) "there were 33,935 individual insolvencies in England and Wales in the third quarter of 2010. This was a decrease of 3.7% on the same period a year ago. This was made up of 13,907 bankruptcies (which were down 24.2% on the corresponding quarter of the previous year), 12,960 Individual Voluntary Arrangements (IVAs), (which were up 4.6% on the corresponding quarter of the previous year) and 7,068 Debt Relief Orders (DROs), which have increased each quarter since their introduction in April 2009... In the third quarter of 2010, 84.4% of bankruptcies were made on the petition of the debtor, broadly comparable to the levels for recent quarters.  The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) was 12.8% in the second quarter of 2010 (third quarter 2010 figures for trading-related bankruptcies are not yet available), similar to the level for 2009 as a whole."

The statistics release contains a particularly interesting long term analysis of liquidation and bankruptcy over time. See here. These latest figures will certainly be of interest to some celebrity insolvents.

The statistics have been picked up by various press outlets including the Press Association, the Daily Telegraph, Skynews, The Financial Times, the Daily Mail, the Mirror, Woman's Hour (BBC Radio Four - "Have you found yourself bankrupt? Or considered insolvency? A new report has found that nearly 40% more middle-aged women went bankrupt last year than the year before. Jane asks insolvency experts Louise Brittain and Keith Stevens to explain the figures, while finance guru Sarah Pennells gives some sound financial advice."),  and Accountancy Age. The Association of Business Recovery Professionals (R3) have also picked up on the figures. Their President, Mr Stephen Laws, has opined:

"With corporate insolvency numbers down 20% across the board compared to the same quarter a year ago, we are clearly not following typical post-recessionary trends when corporate insolvency numbers have always continued to rise. Current fiscal and monetary policies such as Time to Pay agreements and low interest rates, coupled with a more supportive attitude from the banks has kept numbers down.

However, these factors cannot remain with us forever, and we could be benefitting from a ‘calm before the storm’. Research by R3, the insolvency trade body reveals that one in five businesses (19%) are worried about their current debt levels and should servicing debt become more expensive, this could trigger more corporate insolvencies.

Our members, the UK’s insolvency practitioners, are predicting an increase in corporate insolvency numbers next year to 27,500 insolvencies (in 2009 the figure was 26,400) while nearly 400,000 businesses have relied upon on delaying outstanding payments to the crown and we should not assume 2011 will automatically be smooth sailing. We would urge any business concerned about its current debt levels to use these benign conditions to seek advice early to prepare for whatever next year brings.”

“Personal insolvency remains at near record levels, on a steeply upward path since 2004 with 1 in 311 people becoming insolvent this quarter compared to an annual average of 1 in 575 over the last 25 years. These official figures are only the tip of a debt iceberg with nearly 1 million individuals struggling with debt, but not seeking advice, and a further 500,000 currently in informal debt management plans unrecorded in these figures. Increases in unemployment would obviously trigger more personal insolvencies, and seeking advice early is the only way to deal with this stressful situation.”

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