Personal insolvencies fall by 22%

New figures from the Insolvency Service have shown that personal insolvencies in England and Wales fell by 22% in November 2020, with 9,319 personal insolvencies compared to October’s figure of 11,945, and were 3% lower than November 2019’s figure of 9,568.

Both DROs and Bankruptcies fell by around one third in November 2020 compared with November 2019 numbers

There were 1,425 Debt relief orders (DROs) and 927 bankruptcies (the latter were made up of 836 debtor applications and 91 creditor petitions). There was a 38% reduction in DROs and a 32% reduction in bankruptcies in November 2020, compared with the same month last year. The reduction in bankruptcies was driven by a 26% fall in debtor applications and a 60% reduction in creditor petitions.

The average number of IVAs registered in each of the last three months ending November 2020 was slightly higher than the same three-month period last year

There were, on average, 7,057 IVAs registered in each of the 3 months ending November 2020, 3% higher than the rolling 3-month average observed in the same period ending November 201

Commenting on the figures Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets, said “Numbers of all types of personal insolvencies fell in November compared with October, leading to an overall month-on-month drop of over a fifth. The fall compared with the same month last year is less precipitous, however, with more IVAs registered last month than in November 2019. It is only a pronounced reduction in bankruptcies and Debt Relief Orders which meant there were 3% fewer individual insolvencies in November 2020 when compared with a year ago.”

“Businesses and individuals from Land’s End to John O’Groats have been affected by COVID-19 and the only reason this hasn’t shown up in the insolvency statistics yet is because of the extensive support the Government has provided. Without it, we’d be in a very different situation – and a very grave one at that.”

“The economy is still nearly 8% smaller than it was in February, unemployment has increased, and a number of big brands have entered insolvency processes or announced restructuring programmes in recent weeks.”

“That said, the extension of the furlough scheme and the temporary ban on winding-up petitions until the end of March will provide some reassurance to many businesses and their staff as we go into the Christmas period and the first quarter of 2021.”

“However, the effect of the various restrictions and lockdowns across the UK remains to be seen, and questions remain about the Government’s strategy for eventually winding down its packages of support and what will happen to those benefiting from these measures once they end. Against this backdrop, and with the clock ticking, continued uncertainty around the UK’s future trading relationship with the EU is one issue that many already struggling firms could do without.”

“A good festive trading period has never been more important, but the impact of repeated stop-start closures in many sectors, and the disruption to usual pre-Christmas activities and events, mean that many companies will face a cold start to 2021.”

“As we approach the end of this year, it becomes even more critical that company directors and individuals seek advice from a qualified source as soon as they see signs their business or their personal finances are starting to struggle. The earlier they seek advice, the more options they have to resolve their situation, and the more time they have to take a considered decision about how they move forward.”