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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

05 AUG 2011

Insolvency Service - Insolvency Statistics for the Second Quarter 2011

The Insolvency Service (IS) have published the 2011 second quarter statistics. On the corporate side they note, "There were 4,233 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the second quarter of 2011 (on a seasonally adjusted basis).  This was an increase of 2.7% on the previous quarter and an increase of 4.4% on the same period a year ago. This was made up of 1,290 compulsory liquidations (which are up 19.8% on the previous quarter and up 11.1% on the corresponding quarter of the previous year), and 2,943 creditors’ voluntary liquidations (which are down 3.3% on the previous quarter but up 1.7% on the corresponding quarter of the previous year). Additionally, there were 1,232 other corporate insolvencies in the second quarter of 2011 (not seasonally adjusted) comprising 350 receiverships, 695 administrations and 187 company voluntary arrangements. In total these represented a decrease of 6.0% on the same period a year ago."

On the personal side they have noted: "There were 30,513 individual insolvencies in England and Wales in the second quarter of 2011. This was a decrease of 12.2% on the same period a year ago. This was made up of 11,113 bankruptcies (which were down 25.8% on the corresponding quarter of the previous year), 12,143 Individual Voluntary Arrangements (IVAs), (which were down 9.8% on the corresponding quarter of the previous year) and 7,257 Debt Relief Orders (DROs), (which were up 15.3% on the corresponding quarter of the previous year). In the second quarter of 2011, 83.0% 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 20.6% in the first quarter of 2011 (second quarter 2011 figures for trading-related bankruptcies are not yet available), noticeably higher than levels seen in recent quarters."

The Telegraph and R3 have picked up on the statistics release. R3 president, Francis Coulson has noted: 

"Personal insolvency increases

 “The quarter on quarter increase in personal insolvency is regrettable, yet expected, given job cuts and compulsory redundancies being announced in recent months, in both the public and private sector. Nearly a third of people (30%) do not have any savings at the moment according to R3’s latest personal debt snapshot, with many households failing to have a contingency plan for any fall in income or increased outgoings. Therefore, a swift change in circumstance such as losing a job is likely to have pushed many individuals into insolvency.

 “The increase in personal insolvencies is likely to continue; we have seen over recent months living costs rise and high inflation effectively reducing ‘take home’ pay. Added to the fuel hike that will hit families in the winter months, this may be the start of a worrying trend.

  “Unfortunately, this data does not capture the figures for those in informal insolvency procedures such as debt management plans (DMPs) so we are unable to get a true measure of how many households are struggling. R3 research revealed more than 2 million people have taken out a ‘payday’ loan over the last year, while 53% of individuals are concerned about their current levels of debt.”

Corporate insolvencies increase for consecutive quarters 

“The consecutive quarter increase in corporate insolvency levels is unsurprising given the latest GDP figures revealing marginal growth of just 0.2%. Despite the economy officially being out of recession for some time the early recovery is sluggish and confidence has not returned to UK plc.

 “In recent months we have seen many high-profile retail businesses fall into administration, triggered by ‘Quarter Day’, the traditional time for commercial businesses to pay their next quarter’s rent. It revealed that for many retail businesses who hung on through the worst of the recession they simply did not have the funds to meet their rental obligations. This is reflective of many businesses in other sectors; they have depleted their reserves to stay afloat and have no contingency plan for additional costs, unexpected outgoings or a fall in sales.”

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