INSOLVENCY STATISTICS
MONITOR
February 2013
The Insolvency Service has published the official insolvency statistics for England and
Wales for the fourth quarter of 2012.
Company insolvencies
Compulsory liquidations
The number of winding up orders made by the courts in the quarter was 922, down by
15.2% on the previous quarter, and down by 33.8% on the same period in 2011.
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
1,393
1,211
1,023
1,087
922
Percentage change Q4
2012 on:
2011 Q4
2012 Q3
-15.2
-33.8.
Creditors’ voluntary liquidations (CVL’s)
The number of creditors’ voluntary liquidations in the quarter was 2,912, an increase of
1.2% on the previous quarter, and 0.4% on the equivalent quarter of 2011.
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2,901
3,058
3,048
2,877
2,912
Percentage change Q4
2012 on:
2011 Q4
2012 Q3
0.4
1.2
Receiverships, administrations and company voluntary arrangements (CVA’s)
The number of receiverships, administrations and CVA’s registered at Companies House
in the quarter was 1,007, a slight increase of 0.2% on the previous quarter. Overall the
figures show a decrease of 14.2% on the fourth quarter of 2011.
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
1,173
1,290
1,310
986
1,007
Percentage change Q4
2012 on:
2011 Q4
2012 Q3
-14.2
0.2
Individual insolvencies
Bankruptcies
The number of bankruptcy orders made by the courts against individual debtors in the
quarter was 6,919, a decrease of 9.1% on the previous quarter, and down 12.9% on the
corresponding period in 2011.
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
8,658
9.132
8,088
7,617
6,919
Percentage change Q4
2012 on:
2011 Q4
2012 Q3
-12.9
-9.1
Debt Relief Orders
Debt relief orders were introduced in April 2009, for individual debtors with few, if any,
assets or surplus income and relatively modest liabilities. A total of 7,397 orders were
made in the quarter, a decrease of 4.9% over the previous period.
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
7,359
7,897
7,956
7,777
7,397
Percentage change Q4
2012 on:
2011 Q4
2012 Q3
0.5
-4.9
Individual voluntary arrangements (IVA’s)
The number of individual voluntary arrangements in the quarter was 10,986, up 11.7 on
the previous quarter, and a decrease of 15.8% compared with the fourth quarter of 2011.
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
13,047
11,694
11,346
12,668
10,986
Percentage change Q4
2012 on:
2011 Q4
2012 Q3
-15.8
-13.2
Source: The Insolvency Service
Commentary
In the last edition of the Monitor I commented that “the barrage of economic doom and
gloom .... at last seems to be relenting”. Then came Comet, Jessops, HMV,
Blockbusters, disappointing Christmas retail sales figures, poor output figures for
services, manufacturing and construction, the prospect of a “triple dip” recession,
speculation of the UK losing the Chancellor’s cherished “AAA” rating, the Bank of
England reporting “serious headwinds” for the UK economy and the IMF saying that the
global economic recovery seems to be weakening. Perhaps I should keep my thoughts
to myself in future!
The good – if rather surprising - news, is that the number of company liquidations
continues to decline. During 2012 the numbers dropped quarter by quarter resulting in a
total of 16,138 for the year, compared to 16,886 in 2011.
The number of administrations, administrative receiverships and company voluntary
arrangements, the procedures intended to act as rescue mechanisms, also fell in the
year to 4,593 from 4,882 in 2011.
For this recession, corporate failures peaked in 2009 at 25,430, far fewer than in the
recession of the early 1990s. However, the peak year for failures was 1992, when the
economy was coming out of recession, asset prices were starting to recover and
companies’ cash flow was becoming stretched as order books picked up. That hasn’t
yet been seen this time. Research by R3 suggests that there be up to 160,000 “zombie”
businesses in the UK, companies which are managing to service interest on their debts
but are unable to repay the principal. Banks have been showing great forbearance,
although it could be argued that this is tying up capital which could more productively be
used to fund healthier businesses.
One other reason for the comparatively low number of failures has been the hitherto
largely sympathetic approach taken by HMRC towards struggling businesses. Pressure
from the Treasury on HMRC to collect debts seems to be increasing, and they are keen
to dispel the myth that they are just another lender, and that delaying tax payments is an
acceptable way of overcoming cash flow problems.
With 37% of small businesses reporting reduced profits and 24% regularly using their
maximum overdraft facility, we suspect that there are more to failures on the horizon and
that the coming months, even years, will be somewhat busier for the insolvency
profession. As we continually remind our contacts, where businesses in difficulties take
sound, professional advice in good time, instead of leaving things until the problems
become insurmountable, there is often a good prospect of recovering at least part of
what might otherwise have seemed a hopeless case.
The number of individual insolvencies, resumed its downward trend in the fourth quarter
of 2012. Note that the figures do not include individuals who are in debt management
plans. The numbers of bankruptcies, debt relief orders and individual voluntary
arrangements fell to 109,477 in 2012 from a peak of 135,045 in 2010.
With personal credit having been harder to obtain over the last few years the decline in
personal insolvencies is probably to be expected. That said, the Office of National
Statistics recently reported that total unsecured household debt now stands at
£94.7billion, compared to £85.9billion before the recession. More than eight million
people describe their debts as being a “heavy burden” or “something of a burden”. With
stagnating wages and rising living costs that position is unlikely to change any time
soon.
Without wanting to be the doom-mongers of the professional world, we continue to
believe that there is bound to be more pain to come as the UK economy continues what
is, at best, a stuttering recovery and businesses will face challenging times for the
foreseeable future.
Burton Sweet Corporate Recovery is a leading firm of specialist insolvency practitioners
with offices in nine locations:
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