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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

04 MAY 2012

Latest Insolvency Statistics: First Quarter 2012 - Bankruptcies up by 5%, DROs up by 7.3%

The Insolvency Service (IS) have published the latest insolvency statistics today. The statistics cover the first quarter of 2012 and make for very interesting reading. As the IS note: "There were 4,303 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the first quarter of 2012 (on a seasonally adjusted basis).  This was an increase of 0.2% on the previous quarter and an increase of 4.3% on the same period a year ago. This was made up of 1,238 compulsory liquidations (which are down 11.2% on the previous quarter and up 11.1% on the corresponding quarter of the previous year), and 3,065 creditors’ voluntary liquidations (which are up 5.7% on the previous quarter and up 1.8% on the corresponding quarter of the previous year). Additionally, there were 1,290 other corporate insolvencies in the first quarter of 2012 (not seasonally adjusted) comprising 336 receiverships, 779 administrations and 175 company voluntary arrangements. In total these represented a decrease of 1.8% on the same period a year ago."

On the personal side the IS note: "There were 28,723 individual insolvencies in England and Wales in the first quarter of 2012. This was a decrease of 4.7% on the same period a year ago.

This was made up of 9,132 bankruptcies (which were down 27.2% on the corresponding quarter of the previous year), 7,897 Debt Relief Orders (DROs) (which were up 16.3% on the corresponding quarter of the previous year) and 11,694 Individual Voluntary Arrangements (IVAs) (which were up 8.1% on the corresponding quarter of the previous year).  In April 2011 a change was introduced to Debt Relief Order legislation to allow those who have built up value in a pension scheme to apply for debt relief under these provisions; this will have increased the overall numbers of those eligible to apply for a Debt Relief Order, and is also expected to have had some impact on the numbers of bankruptcy orders.

In the first quarter of 2012, 7,233 bankruptcies were made on the petition of the debtor (representing 79.2% of total cases); both the level of debtor petition bankruptcies and their share of total cases have been following a generally decreasing trend since the beginning of 2009 when there were 17,606 (86% of the total). The percentage of bankruptcy orders involving trading debts (self-employed bankrupts) was 22% in the fourth quarter of 2011 (first quarter 2012 figures for trading-related bankruptcies are not yet available); higher than throughout the previous few years. This is due to the decline in numbers of cases involving consumer debts (non-traders) as may be seen in Figure 3 below."

In terms of the longer term the IS have observed: "In the twelve months ending Q1 2012, approximately 1 in 138 active companies (or 0.7% of all active registered companies) went into liquidation, unchanged from the previous quarter.  As Figure 4 shows, the liquidation rate remains low compared to a peak of 2.6% in 1993, and the average of 1.2% seen over the last 25 years.  It should be noted that the number of active companies has changed considerably over this period; there were over 2.4 million active registered companies in Q1 2012; this compares with only about 900,000 in the early 1990s and less than 800,000 in 1986.

In the twelve months ending Q1 2012, approximately 1 in 372 people became insolvent.  This is down from 1 in 366 in the previous quarter.  As Figure 4 shows, the individual insolvency rate had displayed a steeply upward path (with some fluctuations) since 2004 and is currently still elevated compared to the annual average of 1 in 1600 people (0.1%) seen over the last 25 years."

Various news outlets have picked up on the story. See the Independent's treatment here, see the BBC's treatment here, Accountacy Age's treatment here, the Guardian's treatment here, the Herald Scotland's treatment here, the Yorkshire Post here, and the Telegraph's here.

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