Insolvency Figures For First Quarter Of 2018

Published 15 February 2018

Statistics for corporate and personal insolvencies for England & Wales for the first quarter of 2018 were released last Friday 27 April 2018.

In recent times, following changes to the claimable expenses rules, there have been three separate instances of large numbers of connected personal service companies entering liquidation.  For the purposes of this Newsletter, we look at the underlying number of company insolvencies, excluding the effects of these “bulk insolvencies”.

In summary, the underlying number of company insolvencies increased in Q1 2018 by 13% compared to Q4 2017, to the highest quarterly level since Q1 2014.  The highest number of new company insolvencies was in the Construction Industry with 2,668 underlying insolvencies.  The second highest underlying number of new company insolvencies was the Wholesale & Retail trade.

An underlying total of 3,987 companies entered insolvency in Q1 2018 (4,462 including bulk insolvencies), consisting of 2,734 (3,209) creditors’ voluntary liquidations, 783 compulsory liquidations, 367 administrations, 102 company voluntary arrangements and 1 receivership.

As regards personal insolvencies, the total increase in Q1 2018, reached the highest quarterly level since Q3 2012 at 27,388.  This increase was driven primarily by an increase in individual voluntary arrangements, which reached a record high of 16,676, while the number of bankruptcies and debt relief orders also increased.

From the feedback we are receiving, it is widely anticipated that corporate insolvencies are going to rise over the next two years with recent reports forecasting that corporate insolvencies are set to rise by 8% in 2018.  This will be driven in part by the likelihood of interest rate rises and the unwinding of quantitative easing.  

  No. in quarter % change on previous quarter % change on same period last year
Corporate - Total Companies 4,462 -1.10 12.60
Company Liquidations 3,992 -3.60 13.40
Receiverships 1 100.00 100.00
Administrations 367 15.70 2.30
Company Voluntary Arrangements 102 85.50 18.60
Personal - Total Individuals 27,388 6.80 8.50
Bankruptcies 4,188 9.60 9.30
Individual Voluntary Arrangements 16,676 8.30 8.90
Debt Relief Orders 6,524 1.30 6.90

Source: Insolvency Service and Companies House

Corporate

Over all types of company insolvencies (using the underlying CVLs figures), the number of insolvencies was up in Q1 2018 compared with Q4 2017 with significant increases in company voluntary arrangements, compulsory liquidations and administrations.

Graphical Representation of Company Insolvencies in England and Wales over the last Ten Years
Source: Insolvency Service and Companies House (numbers in '000s)

Personal

During the 12 months ending Q1 2018, 1 in 458 adults became insolvent, representing 0.22% of the adult population.  This is the highest rate since the 12 months ending Q4 2014 and continues the rising trend since 2015, largely driven by individual voluntary arrangements. 

This upwards trend reflects the pressure on individuals personal finances during recent times although with wage rate rises now outstripping inflation and the rise in the national minimum wage should bring some welcome relief to many.  Counter to this, however, is the higher minimum auto-enrolment pension contributions rising from 1% to 3%.  

Graphical Representation of Individual Insolvencies in England and Wales over the last Ten Years
Source: Insolvency Service and Companies House