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Overview of Q1 Insolvency Statistics

We are already approaching the halfway mark in Q2 and we’ve just about caught our breath. The level of recruitment taking place across the insolvency profession in the UK has been significant since the turn of the year and this is usually a very good indicator as to the volume of work coming through to our clients.

It, therefore, made very interesting reading to see the latest corporate and personal insolvency rates for Q1 as published by the Insolvency Service last week.

We’ve broken down the main headlines for you to read through:

Corporate:

  • Company insolvencies (England & Wales) were up by 6.3% compared to Q4 2018, with Administrations up by 21.8% and CVAs up 43.1%.

  • In Q1 2019, 67.4% of all company insolvencies ended in a CVL process.

  • 451 Administrations in Q1 2019, which is the highest recorded number since Q1 2014.

  • For the twelve months ending Q1 2019, the construction industry had the highest number of insolvencies (3,013).

  • However, the “Wholesale & retail trade; repair of vehicles” industry saw the overly largest increase in insolvency levels.

  • Overall insolvencies in Scotland increased by 16% in Q1 2019, compared to the same quarter of the previous year, with the majority being Compulsory Liquidations.

  • Northern Ireland, on the other hand, had 66 Insolvencies in Q1 2019, which is a decrease of 29.4% compared with the same quarter of the previous year. Like Scotland, most of these Insolvencies were Compulsory Liquidations.

Personal:

  • Total individual insolvencies fell in Q1 2019 from an 8 year high in Q4 2018.

  • Though a decrease compared to the previous quarter, there was a slight increase this time last year at 15.9%.

  • The decrease in individual insolvencies compared to Q4 2018 was largely due to a drop in IVAs.

  • In comparison to Q1 2018, all individual insolvencies increased with IVAs being the most significant increase at 19%.

  • Bankruptcy applications made by the debtor has increased by 0.1% to the previous quarter and 5.4% to the same period in 2018.

  • Creditor petition bankruptcies rose by 0.6% compared to Q4 2018, however, decreased by 10.8% in the same period last year.

  • In the 12 months up to the end of Q1 2019, of 10,000 adults, 25.8 entered insolvency compared to 24.9 in the 12 months up to the end of Q4 2018.

  • The current individual insolvency rate remains high compared to less than 10 per 10,000 adults prior to 2004.

Much has been reported about the current state of the UK high street and when you couple this with the uncertainty surrounding Brexit, it isn’t of many surprises to see the number of company administrations at their highest level in five years.

Rising employment costs, business rates and uncertainty surrounding the UK's future in the EU have hit SMEs hard this year and there doesn’t seem to be much sign of this changing as we progress through Q2 and the remainder of the year.

The other hard-hitting statistics from this report is the number of individuals who entered an insolvency procedure in Q1. Although lower than the previous quarter, there were still a lot of individuals requiring the services of Insolvency Practitioners across the UK. 

Our over-reliance as a nation on ‘affordable’ and easily accessible personal borrowing coupled with a prolonged stagnation in wage increases versus higher living costs has created the perfect storm.

Download Insolvency & Restructuring Q2 2019 Market Insights here.