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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

29 APR 2009

Lightfoot Revisited - the changing face of UK personal insolvency law through the statistics

In R. v Lord Chancellor Ex p. Lightfoot [2000] Q.B. 597, Simon Brown L.J. was able to say (at page 617) that:

"Some 20,000 bankruptcy orders are made each year."

If we note the table below we can see that he was only some 1,550 or so people out for the year in question (2000), but that he was roughly in the ball park. Perhaps the most important thing to take from his introductory comment is the relatively low number of individuals passing through the singular legal procedure that is bankruptcy in the year 2000 compared to 2008. Some eight years later there were 64,480 people who were declared bankrupt in 2008. This amounts to a threefold increase in redress to this so called relief and rehabilitation mechanism.

A perusal of the excellent insolvency statistics database at the Insolvency Service (IS) always makes interesting reading. I have reproduced here the historical table of personal insolvency since 1960. In retrospect the increase of redress to bankruptcy from 2004 makes uncomfortable reading for proponents of the reduction in automatic discharge movement. More work on the drivers of personal insolvency needs to be undertaken before we can definitively say whether or not the legislative change in the automatic discharge period or the over extension of credit argument is responsible for the hike in figures from 2004.

The fact that Individual Voluntary Arrangements (IVAs) have experienced a similar upswing since 2004 could lend weight to the argument that it is the extension of credit driver that lays behind the increase in both procedures. Protagonists might however retort that this view is simplistic and that it does not take into account the rise of the so called 'IVA factories'.

With the recent increase in the Scottish personal insolvency statistics due to the LILA procedure, it looks as if the IS statisticians will be kept busy with the DRO procedure.

 

 

 

 

 

 

 

 

INDIVIDUAL INSOLVENCIES IN ENGLAND AND WALES (1960-2008)

 

 

 

 

 

 

 

 

 

 

 

Not Seasonally Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

 

Total

Bankruptcy 

Individual

Deeds of

 

 

 

 

 

Orders

Voluntary

Arrangements

 

 

 

 

 

 

Arrangements

 

 

 

 

 

 

 

 

 

 

1960

 

 

3,220

2,944

:

276

 

1961

 

 

3,941

3,642

:

299

 

1962

 

 

4,602

4,273

:

329

 

1963

 

 

4,370

4,129

:

241

 

1964

 

 

3,766

3,552

:

214

 

1965

 

 

3,762

3,556

:

206

 

1966

 

 

4,062

3,862

:

200

 

1967

 

 

4,386

4,224

:

162

 

1968

 

 

4,298

4,150

:

148

 

1969

 

 

4,772

4,552

:

220

 

1970

 

 

5,087

4,907

:

180

 

1971

 

 

4,793

4,643

:

150

 

1972

 

 

4,337

4,244

:

93

 

1973

 

 

3,917

3,817

:

100

 

1974

 

 

5,718

5,608

:

110

 

1975

 

 

7,271

7,143

:

128

 

1976

 

 

7,207

7,108

:

99

 

1977

 

 

4,485

4,403

:

82

 

1978

 

 

3,902

3,826

:

76

 

1979

 

 

3,500

3,456

:

44

 

1980

 

 

4,038

3,986

:

52

 

1981

 

 

5,151

5,075

:

76

 

1982

 

 

5,700

5,654

:

46

 

1983

 

 

7,032

6,981

:

51

 

1984

 

 

8,229

8,178

:

51

 

1985

 

 

6,776

6,728

:

48

 

1986

 

 

7,155

7,093

:

62

 

1987

 

 

7,427

6,994

404

29

 

1988

 

 

8,507

7,717

779

11

 

1989

 

 

9,365

8,138

1,224

3

 

1990

 

 

13,987

12,058

1,927

2

 

1991

 

 

25,640

22,632

3,002

6

 

1992

 

 

36,794

32,106

4,686

2

 

1993

 

 

36,703

31,016

5,679

8

 

1994

 

 

30,739

25,634

5,103

2

 

1995

 

 

26,319

21,933

4,384

2

 

1996

 

 

26,271

21,803

4,466

2

 

1997

 

 

24,441

19,892

4,545

4

 

1998

 

 

24,549

19,647

4,901

1

 

1999

 

 

28,806

21,611

7,195

0

 

2000

 

 

29,528

21,550

7,978

0

 

2001

 

 

29,775

23,477

6,298

0

 

2002

 

 

30,587

24,292

6,295

0

 

2003

 

 

35,604

28,021

7,583

0

 

2004

 

 

46,650

35,898

10,751

1

 

2005

 

 

67,584

47,291

20,293

0

 

2006

 

 

107,288

62,956

44,332

0

 

2007

 

 

106,645

64,480

42,165

0

 

2008

p

 

106,544

67,428

39,116

0

 

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