Latest Insolvency numbers are released for March 2021.Posted: Apr 15, 2021

The Insolvency Service produces monthly figures for both corporate and personal insolvencies and as mentioned previously, I rarely comment on them. Partly because insolvencies are seasonal, so generally increase in the first and third quarter of the year and decrease in the second and fourth quarter and partly because there is not much to talk about.

Yet again they show a drop on last year’s numbers but what is different is that The Insolvency Service is showing a comparison with 2019 to show the contrast with a non-pandemic view of the numbers.

Let us look at the numbers, below is the summary provided by the Insolvency Service.

‘The number of registered company insolvencies in March 2021 was 992:

·        20% lower than the number registered in the same month in the previous year (1,236 in March 2020), and

·        37% lower than the number registered two years previously (1,586 in March 2019).

For individual insolvencies, the number of bankruptcies in March 2021 was 1,028, while the number of Debt Relief Orders (DROs) was 1,591. Both were 31% lower than in March 2020 and 34% lower than in March 2019.

There were, on average, 6,388 IVAs registered per month in the three-month period ending March 2021:

·        24% higher than for the three-month period ending March 2020, and

·        2% higher than the three-months ending March 2019. Note that this series is volatile (see the Data Sources and Methodology section for more information).

Overall numbers of company and individual insolvencies have remained low since the start of the first UK lockdown in March 2020, when compared with pre-pandemic levels. This is likely to be partly driven by government measures put in place in response to the coronavirus (COVID 19) pandemic, including:

·        Temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations).

·        Enhanced government financial support for companies and individuals.

As the Insolvency Service does not record whether insolvency is directly related to the coronavirus pandemic, it is not possible to state the direct effect of the pandemic on insolvency volumes.’

You could suggest that this shows that the Government support schemes have worked and so is good news. My personal view is that many businesses which would have failed anyway and will eventually fail when the Government support ends, the difference being that we as taxpayers face a high bill for the furlough scheme and loans that the Government has supplied.

For example, Compulsory liquidations are 90% lower than in March 2019. A Compulsory Liquidation is a situation where a creditor applies to the court to wind up a company for a debt due. Historically, the main creditor in the majority of these cases was HMRC. At the minute, there are restrictions in place to stop petitions unless you can prove the debt is not because of the pandemic. I think it is fair to assume that there must be a massive backlog of cases that will come about when the restrictions end.

As the restrictions end you may want to look closely at who owes you money and ensure that your credit controls are in place because the last thing you need right now is to be on the wrong end of a bad debt.

If your business is being impacted and you think you could be facing insolvency, then talk to us. The first consultation is free and whether it results in comforting reassurance, a rescue plan, or an insolvency process, the sooner we start, the better your result will be.