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Commentary - Company Insolvency Statistics July to September 2022

Published 28 October 2022

Released

28 October 2022

Next release

31 January 2023

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1. Main messages for England and Wales

• Between 1 July and 30 September 2022 (Q3 2022), there were 5,595 (seasonally adjusted) registered company insolvencies, as shown in Figure 1, comprising 4,800 creditors’ voluntary liquidations (CVLs), 492 compulsory liquidations, 274 administrations and 29 company voluntary arrangements (CVAs). There were no receivership appointments.

• After seasonal adjustment, the number of company insolvencies in Q3 2022 was 1% lower than in Q2 2022 but 40% higher than in Q3 2021. The number of CVLs remained close to the highest quarterly level since the start of the series in 1960 (Q2 2022). The number of compulsory liquidations also increased to the highest quarterly number since the start of the coronavirus (COVID-19) pandemic, but remained lower than pre-pandemic levels.

• One in 213 active companies (at a rate of 46.9 per 10,000 active companies) entered liquidation between 1 October 2021 and 30 September 2022. This was an increase from the 29.3 per 10,000 active companies that entered liquidation in the 12 months ending 30 September 2021.

Figure 1: Registered company insolvencies in Q3 2022 were higher than pre-pandemic levels, driven by a historically high number of CVLs and an increase in compulsory liquidations.

England and Wales, Q3 2002 to Q3 2022, seasonally adjusted

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

Single-quarter peaks in ‘Other insolvencies’ in Q4 2006 and Q3 2008 are due to large numbers of connected managed service companies entering administration on the same day in these quarters.

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release. Record level data back to Q1 2012 (where available) can also be found in a separate CSV file published alongside this release.

From the start of the coronavirus (COVID-19) pandemic until mid-2021, numbers of company insolvencies were low when compared with pre-pandemic levels. This is likely to have been driven in part by Government fiscal and other measures that were put in place to support businesses and individuals during the pandemic. Compulsory liquidation, administration and CVA numbers remained lower throughout 2021 and were still lower than pre-pandemic levels in Q3 2022.

CVL numbers rose between Q2 2021 and Q2 2022 and the two most recent quarters (Q2 and Q3 2022) have seen the highest number of CVLs in the time series going back to 1960. The number of compulsory liquidations has also increased during 2022 from the historically low levels seen in 2021.

2. Things you need to know about this release

This statistics release contains the latest data on company insolvency in the UK, presenting the numbers of companies who have entered a formal insolvency procedure after being unable to pay their debts. Information is presented separately for England and Wales, Scotland and Northern Ireland.

The Insolvency Service separately publishes monthly statistics to provide more up to date information on the numbers of company and individual insolvencies during this time of economic uncertainty. However, they have not replaced the quarterly National Statistics, since the information presented on a monthly basis is less granular and is less reliable for monitoring changes in trends over time. Note that the monthly statistics on company insolvencies may not be consistent with data presented within this statistical release.

Underlying data for these quarterly statistics for England and Wales were adjusted where there was evidence of seasonality, to account for variation in company insolvencies across the year and allow for comparison to the most recent period within years. Data for Scotland and Northern Ireland were not adjusted. The seasonal adjustment models are typically reviewed on an annual basis. In accordance with the outcome of the April 2022 Seasonal Adjustment Review, CVLs and administrations were seasonally adjusted.

Quarters referred to in this publication are calendar year quarters, such that Q3 2022 is the period from 1 July to 30 September 2022.

2.1 Designation as National Statistics

The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Statistics. Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

The last compliance review was conducted in July 2019.

Designation can be broadly interpreted to mean that the statistics meet identified user needs; are well explained and readily accessible; are produced according to sound methods, and are managed impartially and objectively in the public interest.

3. Company insolvency in England and Wales

3.1 Numbers of company insolvencies

After seasonal adjustment (where applicable), there were 5,595 company insolvencies registered in Q3 2022, 40% higher than during the same quarter in the previous year but similar to the number in the previous quarter (Q2 2022) which was the highest total since Q3 2009.

Creditors’ voluntary liquidations (CVLs) were the most common company insolvency procedure (86% of cases), followed by compulsory liquidations (9% of cases), administrations (5% of cases) and company voluntary arrangements (CVAs; 1% of cases). There were no receivership appointments, which are now rare (see glossary for further details).

A summary of company insolvencies since Q3 2021 can be found in Table 1 below. The long-term series prior to Q3 2021 can be found in the excel and CSV files that accompany this release.

Unlike the monthly statistics, quarterly statistics are seasonally adjusted to account for seasonal variation in insolvencies across the year and allow for comparison to the most recent period within years.

Table 1: The numbers of registered company insolvencies in Q3 2022 and Q2 2022 were the highest since Q3 2009

England and Wales, Q3 2021 to Q3 2022, seasonally adjusted

	Total company insolvencies	Compulsory liquidations	CVLs	Administrations	CVAs	Receiverships
2021Q3	3,987	114	3,683	170	20	0
2021Q4	4,626	158	4,162	273	33	0
2022Q1	4,865	340	4,228	272	25	0
2022Q2	5,645	383	4,911	318	32	1
2022Q3	5,595	492	4,800	274	29	0
Percentage change, latest quarter (Q3 2022) compared with:
vs 2022Q2	-1%	28%	-2%	-14%	-9%	[z]
vs 2021Q3	40%	332%	30%	61%	45%	[z]

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

[z] indicates percentage changes are not applicable as these have not been calculated where both numbers are less than five.

CVLs

In Q3 2022, CVLs accounted for 86% of all company insolvencies. The number of CVLs decreased by 2% from Q2 2022, but was 30% higher than during the same quarter last year, after seasonal adjustment. The number of CVLs was near last quarters record high in the time series, which began in 1960.

The increase in CVLs between Q2 2021 and Q3 2022 coincided with the phasing out of measures put in place to support businesses during the coronavirus pandemic. For example, the percentage of government contribution to employee wages through the Coronavirus Job Retention Scheme (furlough), decreased from 1 July 2021, with the scheme ending on 30 September 2021. The suspension of wrongful trading liability, which allowed directors to continue trading without facing the threat of personal liability despite uncertainty that their company may not be able to avoid insolvency in the future, ended on 30 June 2021.

Compulsory liquidations

The number of compulsory liquidations in Q3 2022 was 28% higher than in the previous quarter and more than four times as high (332% higher) as in Q3 2021. However, compulsory liquidation numbers remained lower than pre-pandemic levels.

Lower numbers of compulsory liquidations since the start of the pandemic are likely to have been driven in part by Government fiscal and other measures that were put in place to support businesses and individuals, including, temporary restrictions on the use of statutory demands and certain winding-up petitions (leading to company compulsory liquidations). On 31 March 2022, all of the remaining temporary insolvency measures ended.

Administrations

The number of administrations in Q3 2022 was 14% lower than the previous quarter, but 61% higher than the number in the same quarter of the 2021, after seasonal adjustment.

CVAs

The number of CVAs was 9% lower in Q3 2022 than in Q2 2022, but 45% higher than Q3 2021.

Receivership appointments

There were no receivership appointments in Q3 2022.

Moratoriums and restructuring plans

Between 26 June 2020 and 30 September 2022, 40 companies obtained a moratorium and 12 companies had a restructuring plan registered at Companies House. These two procedures were created by the Corporate Insolvency and Governance Act 2020.

3.2 Liquidation rates per 10,000 active companies

In the four quarters ending Q3 2022, the company liquidation rate was 46.9 per 10,000 active companies in England and Wales (Table 2 and Figure 2 below). This corresponds to 1 in 213 companies entering liquidation in the 12 months ending Q3 2022.

The insolvency rate gives an indication of the probability of a company entering liquidation in the previous four quarters. As the rates are calculated as a proportion of the total number of active companies, they are more comparable over longer time periods than the absolute numbers.

The rates presented for each quarter reflect a four-quarter rolling rate per 10,000 active companies. Therefore, the Q3 2022 rates, for example, were calculated using data covering the period Q4 2021 to Q3 2022.

Table 2: The rate of company insolvencies in the 12 months ending Q3 2022 was higher than in the 12-month periods ending Q2 2022 and Q3 2021

England and Wales, four-quarter rolling rate per 10,000 active companies

	Total liquidations	Compulsory Liquidations	CVLs	CVL following Administration
2021Q3	29.3	1.2	26.7	1.4
2021Q4	32.9	1.2	30.6	1.2
2022Q1	38.9	1.7	36.3	0.9
2022Q2	43.9	2.4	40.7	0.8
2022Q3	46.9	3.3	43.0	0.7
Change in rate per 10,000 active companies, 12 months ending latest quarter (Q3 2022) compared with:
vs 2022Q2	3.0	0.9	2.2	-0.1
vs 2021Q3	17.6	2.1	16.2	-0.7

Source: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

Change in rate numbers may not equal the difference in rates presented due to rounding.

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

The rate of company insolvencies in the 12 months ending Q3 2022 was higher than in the 12-month periods ending Q2 2022 and Q3 2021.

In the four quarters ending Q3 2022:

• The rate of compulsory liquidation increased by 0.9 per 10,000 active companies from Q2 2022, and was 2.1 higher than the period ending Q3 2021;
• the rate of CVLs rose by 2.2 from Q2 2022, and by 16.2 from Q3 2021; and
• the rate of CVLs after administration was 0.1 lower than Q2 2022 and 0.7 lower than from Q3 2021. Note that CVLs following administration are not new insolvency procedures, and are counted as administrations in Table 1.

Figure 2: The liquidation rate in the 12 months ending Q3 2022 was higher than pre-pandemic levels, driven by a higher rate of CVLs.

England and Wales, Q3 2012 to Q3 2022, four-quarter rolling rate per 10,000 active companies

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

3.3 Company insolvencies by industry (SIC 2007)

The following analysis excludes insolvencies where the company industry was unknown, non-trading or dormant (257 in the four quarters ending Q3 2022, compared to 176 in the four quarters ending Q3 2021). In some cases, confirmation of industry sector for compulsory liquidations may be delayed by one quarter or more and therefore insolvency numbers by industry are provisional.

Note that the numbers of insolvencies in these categories are likely to be partly driven by the number of active companies in a given category and do not reflect the relative likelihood of companies in each industry entering insolvency.

The three industries (in accordance with SIC 2007) that experienced the highest number of insolvencies in the 12 months ending Q3 2022 were:

• Construction (3,949, 19% of cases with industry captured);

• Wholesale and retail trade; repair of motor vehicles and motorcycles (2,910, 14% of cases with industry captured);

• Accommodation and food service activities (2,478, 12% of cases with industry captured); and

These were also the three sectors with the most insolvencies in the 12 months ending Q3 2021. The construction industry usually has the highest quarterly number of insolvencies of any industrial grouping.

All industries saw increased insolvency numbers in the 12 months ending Q3 2022 compared to the period ending Q3 2021, as shown in Figure 3. For the larger sectors (those accounting for at least 5% of insolvencies), increases ranged from 44% in Information and communication to 96% in Wholesale & retail trade; repair of vehicles.

Figure 3: All industries saw increased insolvencies in the four quarters ending Q3 2022 compared to the period ending Q3 2021

England and Wales, Q4 2020 to Q3 2022

Sources: Insolvency Service (compulsory liquidations only); Companies House (all other insolvency procedures)

4. Company insolvency in Scotland

Legislation relating to company insolvency in Scotland is devolved. The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers company insolvency in Scotland. The figures below are not seasonally adjusted.

In Q3 2022, there were 276 total company insolvencies in Scotland, 19% higher than in the same quarter of 2021. These comprised 76 compulsory liquidations, 188 CVLs, 11 administrations and one CVA. There were no receivership appointments. These numbers are shown in Figure 4.

Figure 4: Company insolvencies were higher in Q3 2022 than in the same quarter last year, and were similar to pre-pandemic levels

Scotland, Q3 2012 to Q3 2022, not seasonally adjusted

Source: Companies House

Historically, the numbers of company insolvencies in Scotland have been driven by compulsory liquidations. However, since the beginning of the COVID-19 pandemic, there have been more than three times as many CVLs as compulsory liquidations.

Between 26 June 2020 and 30 September 2022, in Scotland, no moratoriums were obtained and two companies had a restructuring plan registered at Companies House. These two procedures were created by the Corporate Insolvency and Governance Act 2020.

The total liquidation rate in Scotland for the 12 months ending Q3 2022 was 44.1 per 10,000 active companies, as shown in Figure 5. This was up by 17.1 (from a rate of 27.0 per 10,000 active companies) from the 12 months ending Q3 2021.

Figure 5: Overall liquidation rates in Scotland increased in the 12 months ending Q3 2022 compared to the 12 months ending Q3 2021

Scotland, Q3 2012 to Q3 2022, four-quarter rolling rate per 10,000 active companies

Source: Companies House

5. Company insolvency in Northern Ireland

Company insolvency in Northern Ireland is governed by separate, but broadly similar, legislation to England and Wales, and so figures are presented separately.

There were 50 company insolvencies in Northern Ireland in Q3 2022, an increase of 47% from the same quarter of 2021. This comprised 38 CVLs, five compulsory liquidations, four administrations and three CVAs. There were no administrative receiverships. These numbers can be seen in Figure 6.

Figure 6: Company insolvencies in Northern Ireland remained lower than pre-pandemic levels

Northern Ireland, Q3 2012 to Q3 2022, not seasonally adjusted

Sources: Department for the Economy, Northern Ireland (compulsory liquidations only); Companies House (all other insolvency procedures)

The total liquidation rate in the 12 months ending Q3 2022 in Northern Ireland was 25.0 per 10,000 active companies, as shown in Figure 7. This is an increase of 11.5 (from a rate of 13.5 per 10,000 active companies) from the 12 months ending Q3 2021.

Figure 7: Liquidation rates in Northern Ireland were higher in the 12 months ending Q3 2022 than in the 12 months ending Q3 2021

Northern Ireland, Q3 2012 to Q3 2022, four-quarter rolling rate per 10,000 active companies

Sources: Department for the Economy, Northern Ireland (compulsory liquidations only); Companies House (all other insolvency procedures)

6. Data and Methodology

6.1 Data Sources

Company insolvency data were sourced from Companies House, except for compulsory liquidation data for England and Wales which were sourced from the Insolvency Service, and compulsory liquidation data for Northern Ireland which were sourced from the Department for the Economy.

Companies House data were used to determine all active companies registered in each quarter in the previous twelve months, to calculate insolvency rates for England and Wales. These data are separately published by Companies House on the Gov.uk website.

More information on the administrative systems used to compile insolvency statistics can be found in the Quarterly Statistics Methodology and Quality document.

6.2 Methodology and data quality

Seasonal adjustment

To aid comparison between quarters, underlying data for CVLs and administrations in England and Wales were adjusted where there was evidence of seasonality to minimise the effect of the time of year and provide a true picture of the trends in insolvency. There was no evidence of seasonality in the underlying data on compulsory liquidations, CVAs and receiverships, therefore these data have not been adjusted. Full details on the models used to adjust the data can be found in the Seasonal Adjustment Review published in April 2022.

The data series for Scotland and Northern Ireland do not demonstrate consistent seasonality and only the unadjusted series have been presented, as agreed with the relevant officials in the devolved administrations.

Rates of insolvency

Insolvency rates were calculated for England and Wales, Scotland and Northern Ireland. The total number of companies entering insolvency in each location during the previous twelve months was divided by the mean average number of all active companies registered with Companies House in that location in the same twelve-month period.

6.3 Revisions

These statistics are subject to scheduled revisions, as set out in the published Revisions Policy. Other revisions tend to be made as a result of data being entered onto administrative systems after the cut-off date for data being extracted to produce the statistics. Any revisions to these statistics will be marked with an ‘[r]’ in the relevant table.

Further details on routine and non-routine revisions can be found in the accompanying Quarterly Statistics Methodology and Quality document.

7. Glossary

Key Terms used within this statistical bulletin

Term	Definition
Administration	The objective of administration is the rescue of the company as a going concern, or if this is not possible then to obtain a better result for creditors than would be likely if the company were to be wound up. A licensed insolvency practitioner, ‘the administrator’, is appointed to manage a company’s affairs, business and property for the benefit of the creditors.
Bulk Creditors’ voluntary liquidation	IR35 rules are intended to prevent the avoidance of tax and National Insurance contributions using personal service companies and partnerships. Between April 2016 and early 2019, following changes to the IR35 rules and/or changes in VAT flat rate, some directors of personal service companies had cited these changes as the primary reason that their company’s activities had become unviable, therefore leading to creditors’ voluntary liquidation (CVL) of large numbers of these companies. These additional CVLs are referred to as “bulk insolvencies”.
Company voluntary arrangement (CVA)	CVAs are another mechanism for business rescue. They are a voluntary means of repaying creditors some or all of what they are owed. Once approved by 75% or more of creditors, the arrangement is binding on all creditors. CVAs are supervised by licensed insolvency practitioners.
Compulsory liquidation	A winding-up order obtained from the court by a creditor, shareholder or director. See Liquidation for details on the process.
Creditors’ voluntary liquidation (CVL)	Shareholders of a company can themselves pass a resolution that the company be wound up voluntarily. See Liquidation for details on the process. Administrations which result in a Creditors’ Voluntary Liquidation are recorded separately by Companies House and are excluded from CVL figures as they do not represent a new company entering into an insolvency procedure for the first time. These cases are only ever recorded as Administrations.
Liquidation	Liquidation is a legal process in which a liquidator is appointed to ‘wind up’ the affairs of a limited company. The purpose of liquidation is to sell the company’s assets and distribute the proceeds to its creditors. At the end of the process, the company is dissolved – it ceases to exist. Statistics on compulsory liquidations and creditors’ voluntary liquidations are presented in these statistics. A third type of winding up, members’ voluntary liquidation is not included because it does not involve insolvency.
Moratorium	Moratoriums were introduced under the Corporate Insolvency and Governance Act 2020 to give struggling businesses formal breathing space in which to explore rescue and restructuring options, free from creditor or other legal action. Except in certain circumstances, no insolvency proceedings can be instigated against the company during the moratorium period. It also prevents legal action being taken against a company without permission from the court.
Partnership Winding-up Orders	This is similar to the liquidation of a company. When the partners have decided that the partnership has no viable future or purpose then a decision may be made to cease trading and wind up the partnership. There are two basic ways that the partnership can be wound up: the creditors petition and a partner’s petition.
Receivership Appointments	Administrative receivership is where a creditor with a floating charge (often a bank) appoints a licensed insolvency practitioner to recover the money it is owed. Before 2000 receivership appointments also included other, non-insolvency, procedures, for example under the Law of Property Act 1925. The use of this procedure is restricted to certain types of company, or to floating charges, created before September 2003.
Restructuring Plan	New restructuring measures were introduced under the Corporate Insolvency and Governance Act 2020 to support viable companies struggling with unmanageable debt obligations to restructure under a new procedure. They allow the court to sanction a plan that binds creditors to a restructuring plan if it is fair and equitable. Creditors vote on the plan, but the court can impose it on dissenting classes of creditors (‘cram down’) provided that the necessary conditions are met.
Standard Industrial Classification (SIC 2007)	Used in classifying business establishments and other statistical units by the type of economic activity in which they are engaged. Further information can be found on the ONS website