Recent Insolvency trends in Northern Ireland, England and Wales

August 3, 2015

The Insolvency Service recently published their quarterly statistics for Q2 2015 April to June. The statistics focus mainly on the trends in England and Wales but also provide comparable statistics for Northern Ireland and Scotland. The results are presented for both company and individual insolvencies.

Company Insolvencies

According to the Q2 results published for E&W, company insolvencies were reported as being at their lowest level since Q4 in 2007. Overall 3908 companies entered into a formal insolvency procedure during Q2. 765 of these were Compulsory Liquidations (liquidations which occur as a result of a Court winding up Order) which represented a 21.9% decrease from the same quarter in 2014. 2470 were Creditor Voluntary Liquidations (CVLs) (an out of court voluntary process initiated by the directors) which represented a 2.3% decrease compared to the same quarter in 2014.

During the same period in NI, a total of 66 company liquidations were reported. 36 of these were Compulsory Liquidations, which represented a 30.8% decrease compared to the same quarter in 2014. The remaining 30 liquidations were CVLs, which represented a 30.4% increase compared to the same quarter in 2014.

Results for E&W show that whilst Receivership appointments were on the increase during Q2, Company Voluntary Arrangements and Administration appointments continued to decrease. Unfortunately no comparable statistics have been provided by the Insolvency Service in relation to the trends for these additional forms of appointments in NI. However general trends in the local insolvency market appear to show that the appetite for Administration appointments is decreasing. Over the past few years in NI we saw a sharp increase in the number of local and national banks seeking to enforce their security via the appointment of Fixed Charge Receivers. Since the beginning of this year we have similarly noticed a decline in these forms of appointment.

Individual Insolvencies

Individual insolvencies during Q2 in E&W reached 18,866, the lowest number of insolvencies reported since Q3 2005 and interestingly the lowest Bankruptcy figures reported since Q4 1990! This figure of 18,866 included 3944 Bankruptcy Orders, 5832 Debt Relief Orders and 9090 Individual Voluntary Arrangements (IVAs).

During Q2 in NI there were 696 reported insolvencies, a 9.5% decrease from the same quarter in 2014. Of these 696 insolvencies, just less than half were Bankruptcy Orders at 304. 119 were from Debt Relief Orders and 273 were IVAs.

As the overall figures in NI are much lower than those in E&W it is difficult to compare the 2 sets of figures like for like against the percentage increase/decrease. However, what is clear to see overall is that Bankruptcy Orders in both jurisdictions continue to decline. IVAs continue to represent the most popular choice of insolvency procedure for struggling debtors and their continued popularity is one of the main reasons for the decline in Bankruptcy Orders.

With the prospect of rising interest rates it will remain to be seen whether IVAs remain the most viable option for debtors moving forward or whether the pressure of increased expenditure will shift the trend back towards an increase in Bankruptcy Orders.

Please see below the link to the recently published statistics:
https://www.gov.uk/government/statistics/insolvency-statistics-april-to-june-2015

Caitriona Morgan, Associate, Cleaver Fulton Rankin

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