On 30 July 2020, the UK Insolvency Service published its quarterly insolvency statistics. Notably:
- Overall numbers of company insolvencies fell by 23% when compared with the previous quarter, and by 33% when compared with the same quarter in 2019.
- The three industries that experienced the highest number of insolvencies in this quarter were the construction industry, the wholesale retail repair of vehicles industry, and the accommodation and food services industry.
The reduction in company insolvencies isn't surprising given the range of government support implemented in response to the COVID-19 pandemic. Interestingly, the Insolvency Service advised that "caution needs to be applied when interpreting these statistics" and suggested that the pandemic may have had some effect on the timeliness of insolvency registration.
In particular, it highlighted that the lockdown may have resulted in insolvency practitioners, Companies House and courts not being able to process insolvencies "in the usual manner". The Insolvency Service also commented that as it does not record whether an insolvency is directly related to the pandemic, it's not possible to state the direct effect of the pandemic on insolvency volumes.
Another practical takeaway is that the Insolvency Service plans to incorporate the new procedures of company moratorium or flexible restructuring plan introduced in the Corporate Insolvency and Governance Act 2020 into future statistical releases. This should provide an useful gauge for how widely-used these new procedures are going forward.