STATISTICS RELEASE: INSOLVENCIES IN THE FOURTH QUARTER 2007 

Statistics showing insolvencies in the fourth quarter 2007 are published today (1 February) by the Insolvency Service.

COMPANY LIQUIDATIONS  

There were 3,135 liquidations in England and Wales in the fourth quarter of 2007 on a seasonally adjusted basis. This was an increase of 0.3% on the previous quarter and a decrease of 2.1% on the same period a year ago. 

This was made up of 1,168 compulsory liquidations, a decrease of 7.2% on the previous quarter and a decrease of 17.0% on the corresponding quarter of the previous year, and 1,967 creditors voluntary liquidations, an increase of 5.4% on the previous quarter and an increase of 9.5% on the corresponding quarter of the previous year.

Year-on-year there have been only modest trends and fluctuations in company liquidations over the last decade.  At 12,426, total liquidations in 2007 showed a 5.4% decrease on 2006 (13,137).

In the twelve months ending Q4 2007, 0.6% of active companies went into liquidation, the same as the previous quarter and the corresponding quarter of 2006.

INDIVIDUAL INSOLVENCIES 

There were 24,846 individual insolvencies in England and Wales in the fourth quarter of 2007 on a seasonally adjusted basis. This was a decrease of 3.9% on the previous quarter and a decrease of 16.4% on the same period a year ago. 

This was made up of 15,659 bankruptcies, a decrease of 1.1% on the previous quarter and a decrease of 8.3% on the corresponding quarter of the previous year, and 9,188 Individual Voluntary Arrangements (IVAs), a decrease of 8.3% on the previous quarter and a decrease of 27.3% on the corresponding quarter of the previous year.

Annually, total individual insolvencies in 2007 (at 106,645) were 0.6% less than in 2006 (107,288).  Bankruptcy orders (at 64,480) were 2.4% higher than in 2006 (62,956), while IVAs (at 42,165) were 4.9% lower than in 2006 (44,332).  Prior to this, year-on-year, total individual insolvencies demonstrated an increasing trend from 1997 to 2006, with particularly steep increases towards the end of this period.  On a quarterly basis, Q4 2007 saw the fourth consecutive decrease in both bankruptcies and IVAs since the levels reached in the fourth quarter of 2006. 

For bankruptcy orders there has been a pronounced shift towards debtor’s petition bankruptcies and away from creditor’s petitions in recent years.  By the fourth quarter of 2007, 83% were made on the petition of the debtor.  On an annual basis, this figure has risen consistently from 53% in 1998 to 84% in 2007. 

The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) has fallen from 61% in 1995 to 17% in 2006 (full year 2007 figures for trading-related bankruptcies are not yet available).

Number of Insolvencies in England and Wales (seasonally adjusted) 1

Percentage change

2006

2007

2007

2007

2007

Q4  2007 on:

Q4

Q1r

Q2r

Q3r

Q4p

Q3 2007

Q4 2006

Company Liquidations

3,202

3,100

3,067

3,125

3,135

0.3

-2.1

of which:

Compulsory

1,406

1,384

1,355

1,258

1,168

-7.2

-17.0

Creditors Voluntary

1,796

1,716

1,712

1,866

1,967

5.4

9.5

Individuals

29,715

29,215

26,737

25,847

24,846

-3.9

-16.4

of which:

Bankruptcies

17,070

16,779

16,210

15,833

15,659

-1.1

-8.3

IVAs

12,645

12,437

10,527

10,014

9,188

-8.3

-27.3

p = provisional,  r = revised
1 Longer series back to 1998 are presented in the accompanying detailed tables

INSOLVENCIES IN SCOTLAND AND NORTHERN IRELAND 

The following tables present recent trends in insolvencies in Scotland and Northern Ireland, complementing those for England and Wales above (longer series back to 1998 are presented in the accompanying detailed tables).

Number of Insolvencies in Scotland (not seasonally adjusted)

Percentage change

2006

2007

2007

2007

2007

Q4  2007 on:

Q4

Q1

Q2

Q3

Q4p

Q3 2007

Q4 2006

Company Liquidations

132

166

165

125

83

-33.6

-37.1

of which:

Compulsory

89

132

131

105

71

-32.4

-20.2

Creditors Voluntary

43

34

34

20

12

-40.0

-72.1

Individuals

3,382

3,471

3,498

3,527

3,318

-5.9

-1.9

of which:

Sequestrations

1,356

1,505

1,606

1,545

1,563

1.2

15.3

Protected Trust Deeds

2,026

1,966

1,892

1,982

1,755

-11.5

-13.4

p = provisional  

Number of Insolvencies in Northern Ireland (not seasonally adjusted)

Percentage change

2006

2007

2007

2007

2007

Q4  2007 on:

Q4

Q1

Q2

Q3

Q4p

Q3 2007

Q4 2006

Company Liquidations

30

36

38

42

48

14.3

60.0

of which:

Compulsory

20

29

29

28

36

28.6

80.0

Creditors Voluntary

10

7

9

14

12

-14.3

20.0

Individuals

482

343

338

337

319

-5.3

-33.8

of which:

Bankruptcies

264

218

228

226

225

-0.4

-14.8

IVAs

218

125

110

111

94

-15.3

-56.9

p = provisional

Notes to Editors

1.  The official Insolvency Statistics are the most comprehensive record of the number of corporate and individual insolvencies in England and Wales. Insolvencies in Scotland and Northern Ireland are also included, but are shown separately as they are covered by separate legislation, there are some differences in definition, and policy responsibility for them lies within the devolved administrations. 

2.  The statistics for England and Wales are derived from administrative records of the department for Business Enterprise and Regulatory Reform (BIS), Insolvency Service and Companies House Executive Agencies. For Scotland, the company insolvency statistics are derived from administrative records at Companies House, Scotland. Figures for individual insolvencies in Scotland are provided by the Office of the Accountant in Bankruptcy (AIB). The Northern Ireland statistics are derived from administrative records of the DETI Insolvency Service and Companies Registry.

3.  Numbers of insolvencies are not directly comparable with official estimates of business stock, formations or closures. Statistics of business start-ups and closures that are directly comparable with each other have been assembled from VAT records and are published by BIS. The latest figures are those for 2006, and were issued in a BIS press notice on 22 August 2007. More detailed figures are available via the on-line database NOMIS. Additionally, analysis into the number of firms in the United Kingdom estimated the total number of businesses at the start of 2006 at 4.5 million. 

4.  The X11ARIMA program (developed by Statistics Canada) is used for the seasonal adjustment of the insolvency statistics for England and Wales, this being the recommended program within UK National Statistics.  Seasonal adjustment is a process by which changes that are due to seasonal or other calendar influences are removed to produce a clearer picture of the underlying behaviour of the data series.  The data series covering Scotland and Northern Ireland do not demonstrate consistent seasonality and only the raw (unadjusted) series are presented. 

5.  Insolvent companies in England & Wales and Scotland are dealt with under the Insolvency Act of 1986 and, in Northern Ireland, by the Insolvency (Northern Ireland) Order 1989. They can either be the subject of a compulsory liquidation (winding-up) order obtained from the court by a creditor, shareholder or director or themselves pass a resolution, subject to the approval of a creditors’ meeting that the company be wound up voluntarily (creditors voluntary liquidations, registered at Companies House/Companies Registry). In either case they are said to have been wound-up, and numbers are given in Tables 1, 6 and 8. A third type of winding-up, members’ voluntary liquidation, is not included because it does not involve insolvency. 

6.  The Insolvency Act 1986 and, in Northern Ireland, the Insolvency (Northern Ireland) Order 1989 also introduced the procedures of company administration orders and company voluntary arrangements (CVAs). The administration procedure gives a period of time during which creditors are restrained from taking action and a court appointed administrator puts forward proposals to deal with the company’s financial difficulties. The CVA procedure aids business by enabling a company in financial difficulty to come to a binding agreement with its creditors. These are listed separately under Table 3 for England and Wales and Table 7 for Scotland. 

7.  The Enterprise Act 2002 introduced revisions to the corporate administration procedures, replacing Part II of the Insolvency Act 1986 with Schedule B1. These include the introduction of additional entry routes into administration that do not require the making of an administration order and a streamlined process for Administrations whereby a company can in some circumstances be dissolved without recourse to liquidation. The primary objective of administration (and of CVAs) is the rescue of the company as a going concern; where liquidation does result these cases will be recorded under the insolvency figures at Tables 1 and 6. These provisions came into force on 15th September 2003 and Administrations under the Enterprise Act have been included on Tables 3 and 7 from Q3 2003 (dissolution follows 3 months after a notice is filed with the Registrar of Companies, if no objections are raised by the court). On 27th March 2006 the Insolvency (Northern Ireland) Order 2005 introduced similar revisions to the corporate administration procedures in Northern Ireland, replacing Part III of the Insolvency (Northern Ireland) Order 1989 with Schedule B1. 

8.  Receivership appointments comprise administrative receivers appointed under the 1986 Act (and the 1989 Order for Northern Ireland) and certain other receivership appointments, for example under the Law of Property Act 1925. Due to the use of the same statutory documentation for different types of receivership, it is not possible to give a breakdown between them. The provisions of the Enterprise Act 2002 [section 250] (Insolvency [Northern Ireland] Order 2005 [Article 5]) have made some changes to the procedures for administrative receivership. 

9.  Individual insolvencies in England and Wales and in Northern Ireland are made up of bankruptcy orders and individual voluntary arrangements (IVAs). Insolvent individuals in England and Wales are dealt with mainly under the Insolvency Act 1986. A bankruptcy order is made on the petition of the debtor or one or more of his creditors when the court is satisfied that there is no prospect of the debt being paid. (Figures for bankruptcy orders include orders relating to the estates of deceased debtors). There are also individual voluntary arrangements (IVAs) and deeds of arrangement (the latter under the Deeds of Arrangement Act 1914), which enable debtors to come to an agreement with their creditors. Table 2 summarises the above procedures (IVAs and Deeds of Arrangement are included under a single column) and Table 2b provides bankruptcy orders further split by petition type. Changes to bankruptcy law in England and Wales introduced by the Enterprise Act 2002 came into force on 1 April 2024 – the Act made no changes to the existing individual voluntary arrangement regime.  

10. Table 2c records numbers of Income Payments Orders (IPOs) and Income Payments Agreements (IPAs) where the bankrupt makes regular payments from surplus income towards his/her debts for a period of time, either by court order or by agreement. The figures record numbers of IPOs/IPAs made in each period, they do not, in general, relate to the date of the original bankruptcy order. Table 2c records a number of IPAs before Q2 2004 because the IPA provisions of the Enterprise Act 2002 (commenced on 1 April 2004) were applicable, upon commencement, to pre-commencement bankruptcies.