Scottish insolvency statistics and some lessons from the past

02 MAR 2009

Whenever a fresh set of insolvency statistics is announced there is invariably some press comment. Figures have now been released in relation to insolvency activity in Scotland and these show a rather dramatic increase in redress to the personal insolvency provisions. This is of particular interest to me as along with Mike Norris, Pat Boyden and Stephen Lawson, I gave evidence to the Scottish Parliament's Enterprise and Culture Committee during the passage of the Bankruptcy and Diligence etc (Scotland) Bill. Our collective evidence related to the effects of the Enterprise Act 2002 in England and Wales and in my case the findings of the Bankruptcy Court Survey 2005.

The broad tenor of my oral submissions was that the main driver of the increase in the English and Welsh statistics following the the reduction in discharge from three years to one year (following the introduction of the Enterprise Act 2002) was not driven by a more liberal bankruptcy discharge regime, but by the natural consequences and fallout of unprecedented lending activity. The current Scottish experience should be monitored closely as it seems as if the discharge reduction in that jurisdiction may have actually encouraged greater redress to the personal insolvency laws. This is at variance to my earlier contentions regarding the English and Welsh position. Further examination of Scottish lending activity over the whole of the period 2000 to 2009 would provide an interesting insight into what is happening north of the border. What is driving Scottish use, is it the reduction in discharge or are we seeing (as within England and Wales) the reduction coinciding with the end of unprecedented lending activity?

The comparison of English and Scottish insolvency provisions is not a novel exercise by any means. In 1891 A. Turnour Murray published his Bankruptcy of Partners ((1891) 7 LQR 53) in which he compared the English and Scottish insolvency provisions relating to the division of insolvent partnerships.

Insolvency statistics always make interesting reading and there are numerous historical parallels for us to critically examine. James Nicholls, an attorney of the Court of Insolvent Debtors wrote a tract on the present practice of the court of insolvent debtors in 1822. The book was entitled: Nicholls, J. The Present Practice of the Court of Insolvent Debtors. Henry Butterworth, London. 1822. This book makes for remarkable reading especially in relation to the activities of the Society for the Discharge and Relief of Persons Imprisoned for Small Debts, throughout England and Wales, of which James Nicholls was solicitor. The book is notable for the excellent breakdown of statistics compiled by Edward Smith, the patentee for the execution of the laws and statutes concerning bankrupts. These statistics show, "the number of commissions of bankruptcy each year, from the year 1790 to the 16 May, 1822, both inclusive, and distinguishing the number of commissions against bankers." With the creation of the insolvent laws (i.e. those laws designed to relieve the insolvent debtor as opposed to the bankruptcy laws which were only available to traders) many people thought that the incidence of bankruptcy commissions were reduced. However, this is not borne out by Edward Smith's figures. The table can be seen in this article.

It has been observed, at least in the popular press, that bankruptcy statistics have only been recorded since 1960. The Insolvency Service do only keep records from that date on their website. But there are many other sources from which an historical picture of redress to the insolvency laws can be examined from a statistical perspective. A small number of sources from the nineteenth century are given below in chronological order. Further sources can be found here.  

1800 - Neild, J. Account of Persons confined for Debt in England and Wales. London, 1800. 

1802 - Neild, J. An Account of the Society for the Relief and Discharge of Persons Imprioned for Small Debts. Nichols, London, 1802. 

1802 - Neild, J. Account of the Rose, Progress and Present State of the Society for the Discharge and Relief of Persons imprisoned for small debts throughout England and Wales. London, 1802. 

1804 – King, J. Remarks on Imprisonment for Debt, on the Recent Progress of the Law and Increase in Lawyers. 2nd Edition. 1804. 

1808 – Neild, J. An Account of the Rise, Progress, and Present State of the Society for the Discharge and Relief of persons imprisoned for small debts throughout England and Wales. London. 1808. 

1811 - Report from the select Committee appointed to take into consideration the present state of commercial Credit, vol. II, 1810-1811. 

1823 – Parliamentary Report on the Recovery of small debts, Jl. HC., col.4, 1823. 1842 - A Faithful Guide through the Insolvent and Bankrupt Courts according to the last Two Acts of Parliament of 1842. By a Solicitor of Twenty Years experience. London. 1842.

1848 – Return of the Bankrupts and Insolvent Debtors in each Year between 1801 and 1819, and 1820 and 1846. (1847-48) 51, no.120 (PP). 

1850 – Bankruptcy Analysis. British Almanac of the Society for the Diffusion of Useful Knowledge. London: Charles Knight, 1831-1850. 

1852 - The Pounds, Shillings, and Pence of Bankruptcy. By a Working member of the Court. London 1852. 

1854 – Report of Her Majesty’s Commissioners Appointed to Inquire into Fees, Funds, and Establishments of the Court of Bankruptcy, and the Operation of the Bankrupt Law Consolidation Act, 1849. (1854) 23, no.1770. 

1854 – Bankruptcy Administration. The Banker’s Magazine 14 (October 1854): 541 – 45. 

1858 – Returns from the Accountant in Bankruptcy. (1857-1858) 47, no.189. (PP). 

1859 – A Return of the Number of Applications for Bankrupts Certificates Heard Before Each Commissioner during each of the last Five Years. (1859) 22, no.52. 

1859 – Court of Bankruptcy Proceedings of the London and District Court, in the year 1858. (1859) 26, p.545. (PP). 1862 – Proceedings of the Court of Bankruptcy, 1861. (1862) 56, p.685. 

1864 – General Returns by the Chief Registrar of the Court of Bankruptcy, 1862 and 1863. (1864) 48, p.303. 

1865 – General Return for the Year 1864 of All Matters Judicial and Financial within the Bankruptcy Act 1861. (1865) 65, p1. 1867 – General Return for the Year 1866 by the Chief Registrar of the Court of Bankruptcy. (1867) 57, p.33. 

1868 – General Return for the Year 1867 by the Chief Registrar of the Court of Bankruptcy. (1867-68) 57, p.1. 

1869 – General Return for the Year 1868 by the Chief Registrar of the Court of Bankruptcy. (1868-1869) 51, p.89. 

1870 – General Return for the Year 1869 by the Chief Registrar of the Court of Bankruptcy. (1870) 57, p.5. 

1871 – General Report by the Comptroller in Bankruptcy for the Year 1870. (1871) 58, no.210. 

1872 – General Report by the Comptroller in Bankruptcy for the Year 1871. (1872) 50, no.237. 

1873 – General Report by the Comptroller in Bankruptcy for the Year 1872. (1873) 54, no.251. 

1874 – General Report by the Comptroller in Bankruptcy for the Year 1873. (1874) 54, no.68. 

1875 – General Report by the Comptroller in Bankruptcy for the Year 1874. (1875) 61, no. 272.

1876 – General Report by the Comptroller in Bankruptcy for the Year 1875. (1876) 61, no.210. 

1877 – General Report by the Comptroller in Bankruptcy for the Year 1876. (1877) 69, no.314. 

1877 – The Report of the Comptroller in Bankruptcy. The Banker’s Magazine 37 (July 1877): 537-544. 

1878 – Statistics of Failures in the United Kingdom. The Banker’s Magazine 38 (February 1878): 106-108.

Individual Voluntary Arrangements

Individual Voluntary Arrangements

"This is the ultimate statement of where the law on IVAs is to be found in our great common law...

Available in Insolvency Law Online
Bankruptcy and Personal Insolvency Reports

Bankruptcy and Personal Insolvency Reports

"BPIR is an excellent series, of interest to both corporate and personal insolvency lawyers,...

More Info from £166.00
Available in Insolvency Law Online