Official Statistics

Commentary - Insolvency Service Enforcement Outcomes 2021/22

Updated 22 April 2022

Released

22 April 2022

Next monthly tables update

12 May 2022

Next annual release

April 2023 (Provisional)

Media enquiries

Steven Fifer

+44 (0)30 3003 1568

Statistical enquiries

Samuel Tudor (author)

statistics@insolvency.gov.uk

David Webster (responsible statistician)

1. Main Messages

• During 2021/22, 802 directors were disqualified under the Company Directors Disqualification Act (CDDA) 1986 as a result of the work of the Insolvency Service. The number of director disqualifications in 2021/22 was lower than in 2020/21. Before the coronavirus (COVID-19) pandemic, the number of disqualifications had been stable at between 1,200 and 1,300 between 2013/14 and 2019/20. Lower numbers in 2020/21 and 2021/22 coincided with historically low numbers of company insolvencies during the pandemic.

• The mean average length of director disqualification in 2021/22 was 5 years and 10 months. The average length has been between 5 years and 5 months, and 6 years in each of the past ten financial years.

• During 2021/22, 52 companies were wound up in the public interest, up ten cases from the previous financial year, but lower than in all previous years in the time series. Numbers of these orders declined followed a legislative change in 2016, which increased the number of regulatory and enforcement bodies to which the Insolvency Service could disclose material. In some cases, allowing disclosure to these additional bodies has been more effective than winding up the company.

• For director disqualification outcomes in 2021/22, the most common allegation made was ‘Unfair treatment of the Crown’, which was an allegation in 297 cases, accounting for 37% of all allegations. The second most common was the 141 allegations (17%) relating to COVID-19 financial support scheme abuse.

• During 2021/22 there were 314 bankruptcy and debt relief restrictions orders and undertakings, similar to the 302 in 2020/21, but lower than levels seen before the coronavirus pandemic. The past two years have seen the lowest levels in the time series going back to 2009/10. The lower numbers of restriction orders coincided with a fall in the number of bankruptcies during the same period.

• As at 31 March 2022 there were more than 6,500 former directors with active disqualifications and over 2,000 individuals subject to bankruptcy and debt relief restrictions.

• During 2021/22, 130 individuals faced criminal charges brought by the Insolvency Service, and 119 were convicted. These numbers were higher than all previous years back to 2016/17.

• There were 424 separate sentences imposed in 2021/22 relating to charges brought by the Insolvency Service. The most common sentences imposed were community orders, which include a range of requirements such as unpaid work, curfews or periods of supervision.

From the start of the coronavirus pandemic until mid-2021, overall numbers of company and individual insolvencies were low when compared with pre-pandemic levels. Bankruptcy and compulsory liquidation numbers remained lower for the entirety of the 2021/22 financial year. Numbers of enforcement outcomes for 2020/21 and 2021/22 are likely to have been affected by this decline in insolvency numbers. Further information on insolvency trends can be found in the published Quarterly and Monthly Insolvency Statistics.

2. Things you need to know about this release

The coverage of the statistics in this release differs throughout due to differences in legislation and policy across the United Kingdom. The geographic breakdown a particular series relates to is detailed throughout this commentary.

The numbers in this release are broken down by financial year, such that 2021/22 means the period from 1st April 2021 to 31st March 2022.

Further details can be found in the accompanying Methodology and Quality Document and Guide to Insolvency Service Enforcement Outcomes.

3. Director Disqualifications

These statistics relate to individuals that have acted as the director of a company in Great Britain, or a company that has an interest in Great Britain and have been disqualified under the Company Directors Disqualification Act (CDDA) 1986 as a result of the work of the Insolvency Service. All underlying numbers for this section can be found in Worksheets 1-1d in the accompanying tables.

A director can be disqualified under different sections of the CDDA, depending on the circumstances:

• Section 2 following conviction for an indictable offence in relation to the promotion, formation, management, liquidations or striking off a company;
• Section 6 for unfit conduct in relation to an insolvent company; or
• Section 8 where it is considered expedient in the public interest.

Further details on director disqualifications and the restrictions imposed on disqualified directors can be found in the accompanying Guide to Insolvency Service Enforcement Outcomes.

3.1 Disqualification Orders and Undertakings

The Insolvency Service obtained, or had significant involvement in obtaining, 802 director disqualifications in 2021/22. Of these, 666 (83%) were undertakings and 136 (17%) were obtained by court order. The number of disqualifications in 2021/22 was 18% lower than in 2020/21 (981), following seven years during which the number of director disqualifications remained stable (Figure 1).

The lower number of director disqualifications in the past two years is linked to historically low numbers of company insolvencies between April 2020 and June 2021. The increase in insolvency numbers since July 2021 has not yet resulted in an increase in director disqualification outcomes due to the time gap between an insolvency and the completion of investigations and subsequent proceedings.

Future case numbers may be impacted by the ability to disqualify directors of dissolved companies following the enactment of the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act.

Figure 1: After being stable between 2013/14 and 2019/20, director disqualification numbers have declined during the coronavirus pandemic

Great Britain, 2009/10 to 2021/22

Source: Insolvency Service

Most director disqualifications made as a result of the work of the Insolvency Service in 2021/22 were in relation to insolvent companies (Section 6 of the CDDA). There were 750 disqualifications made under Section 6 (down from 951 in 2020/21). There were eight disqualifications made under Section 8, and the Insolvency Service also made a substantial contribution to 44 disqualifications in 2021/22 made under Section 2. See Worksheet 1a of the accompanying tables for more information.

3.2 Length of Director Disqualification Orders and Undertakings

A disqualification order or undertaking is typically enforced for between 2 and 15 years (see Guide to Insolvency Service Enforcement Outcomes for further details). Figure 2 shows the average (mean) length of director disqualifications. In 2021/22 this was 5 years and 10 months. This includes disqualifications under Section 6 and Section 8 of the Act, along with Section 2 disqualifications which were a result of referral or significant input from the Insolvency Service.

Figure 2: The average length of director disqualifications has remained stable over the past ten years

Great Britain, 2009/10 to 2021/22

Source: Insolvency Service

The average (mean) length of a director disqualification in 2021/22 was slightly longer than in 2020/21. In 2021/22 the average order length was more than a year longer than for undertakings, with orders having an average length of 6 years, 10 months, while undertakings had an average length of 5 years, 8 months. A reduction in the length of the disqualification can be offered in certain circumstances if the director accepts an undertaking. This is in recognition of the earlier protection of the public and the costs saved from avoiding court proceedings.

Of the 802 director disqualifications made in 2021/22, 359 (45% of the total), were for between 2 and 5 years, 391 (49%) were for over 5 and up to 10 years, and 52 (6%) directors were disqualified for over 10 up to 15 years. See Worksheet 1b of the accompanying tables for more information.

3.3 Active Disqualifications

A total of 6,501 directors who were disqualified in the last 13 years remained disqualified as at 31 March 2022. Additionally, there is likely to be a small number of directors with active disqualifications with lengths between 13 and 15 years that started before 2009/10, however the data from this period are unavailable.

Of the 1,386 disqualifications that came into force in 2009/10, 71 (5%) remain active, while more than half the disqualifications from 2017/18 and all of the disqualifications that came into force in 2021/22 remain active. See Worksheet 1c of the accompanying tables for more information.

3.4 Allegations in Director Disqualification Cases

The allegations shown here are in relation to disqualifications made under Section 6 of the CDDA only – director disqualifications made in relation to an insolvent company. It is possible for more than one allegation to be made in each disqualification case. Therefore, the number of allegations presented here does not match the number of director disqualifications under Section 6 of the Act.

The allegations presented here relate to those disqualification orders and undertakings obtained in the year being reported on in this release, rather than the date the allegations were made. Further information on allegation types can be found in the Guide to Insolvency Service Enforcement Outcomes.

For the 750 disqualifications made under Section 6 of the CDDA in 2021/22, there were a total of 813 allegations recorded, as presented in Figure 3.

Figure 3: The most common allegations in insolvent disqualification cases related to ‘Unfair treatment of the Crown’, ‘COVID-19 financial support scheme abuse’, and ‘Accounting matters’

Great Britain, 2021/22

Source: Insolvency Service

The most common allegation was in relation to Unfair treatment of the Crown (which usually refers to HM Revenue and Customs (HMRC)), which was associated with 37% of director disqualifications in 2021/22. Unfair treatment of the Crown can range from cases where a director had made a conscious decision to pay other creditors and not HMRC, to cases where a director has defrauded or attempted to defraud HMRC. This has been by far the most common allegation made since comparable records began in 2011/12. The second most common allegation in 2021/22 was in relation to COVID-19 financial support scheme abuse.

Further information on all allegation categories listed in Figure 3 can be found in the Guide to Insolvency Service Enforcement Outcomes.

4. Companies Wound Up in the Public Interest

These statistics relate to companies, including United Kingdom and foreign companies registered at Companies House and companies that should be registered as they carry out business in the United Kingdom. The compulsory winding up of a company is a legal process where the company is placed into compulsory liquidation by order of the court.

All underlying numbers for this section can be found in Worksheet 2 in the accompanying tables.

In 2021/22, 52 companies were wound up in the public interest. While this was ten more than last year, numbers remained low compared to historical levels (Figure 4).

Figure 4: The number of companies wound up in the public interest remains lower than pre-2016 levels

United Kingdom, 2009/10 to 2021/22

Source: Insolvency Service

The number of companies wound up in 2011/12 included two major investigations resulting in 61 and 106 winding up orders.

In October 2016, the Companies (Disclosure of Information) (Specified Persons) Order 2016 came into effect. This added a further five regulatory and enforcement bodies to the statutory list of those to whom the Insolvency Service can disclose material relating to live investigations. This has widened the range of actions the Insolvency Service can take following a company investigation, allowing disclosure in instances where it was previously not possible. In some cases, it has been more effective to use these disclosure gateways than wind up the company. This may for example include working with Companies House to dissolve a company.

The number of companies wound up in the public interest is included in the total compulsory liquidation cases that are reported in the Insolvency Statistics and as such do not represent additional liquidations.

5. Bankruptcy and Debt Relief Restrictions Orders and Undertakings

These statistics relate to people subject to a bankruptcy or debt relief order in England and Wales – formal insolvency procedures for individuals who have had problems with debt – where the individual is considered to be culpable. A restriction order is made by the court after considering evidence submitted by the official receiver showing the individual to have been dishonest or blameworthy.

Bankruptcy and debt relief restrictions are presented together throughout this release. As there are very few debt relief restrictions made, it is not possible to draw conclusions from analysing them on their own. All underlying numbers for this section can be found in Worksheets 3-3c in the accompanying tables.

5.1 Restrictions Orders and Undertakings

In 2021/22, a total of 314 bankruptcy and debt relief restrictions orders and undertakings were made, compared to 302 in 2020/21 (Figure 5). The lower numbers in the past two years followed a period of stability from 2015/16, during which the number of restrictions was between 435 and 485 in each year. Of the restrictions in 2021/22, 11 were restrictions orders (down from 14 in 2020/21) and 303 were restrictions undertakings (compared to 288 in 2020/21).

Figure 5: Numbers of bankruptcy and debt relief restrictions orders and undertakings in 2021/22 remained lower than pre-pandemic levels

England and Wales, 2009/10 to 2021/22

Source: Insolvency Service

The decline in the number of restrictions orders and undertakings since 2009/10 has been driven by the reduction in the number of individuals that have entered bankruptcy over the period. More information on the trends and drivers of the number of individuals entering into formal insolvency procedures, including bankruptcy, debt relief orders and individual voluntary arrangements, can be found in the published Quarterly and Monthly Insolvency Statistics.

5.2 Length of Bankruptcy and Debt Relief Restrictions Orders and Undertakings

The length of time that a restrictions order or undertaking can be enforced ranges from 2 to 15 years. The average (mean) length of restrictions overall in 2021/22 was 5 years and 2 months, seven months longer than in the previous year (Figure 6).

Figure 6: The average length of bankruptcy and debt relief restrictions increased by seven months in 2021/22, but remained similar to historical levels

England and Wales, 2009/10 to 2021/22

Source: Insolvency Service

The average length of restriction orders made in 2021/22 was 5 years and 2 months, the same as the previous year, while the average length of a restrictions undertaking was 5 years and 1 months, six months longer than the previous year. Overall, the average length of restrictions has largely remained stable since 2009/10.

In 2021/22, 68% of the 314 restrictions imposed were for between 2 and 5 years, whilst 31% were for more than 5 years and up to 10 years, and 1% were for restrictions of more than 10 years, up to 15 years.

5.3 Active Bankruptcy and Debt Relief Restrictions Orders and Undertakings

A total of 2,010 bankruptcy and debt relief restriction orders and undertakings that began in the last 13 years remain in effect, as at 31 March 2022. This does not include a small number of orders and undertaking still in effect that started before 2009/10 as data are unavailable.

Of the 1,945 bankruptcy and debt relief restrictions orders and undertakings that came into effect in 2009/10, three (less than 1%) remain active, 43% of orders and undertakings that came into effect in 2017/18 remain active, while all orders and undertakings that came into effect from 2020/21 and 2021/22 remain active. See Worksheet 3b of the accompanying tables for more information.

5.4 Allegations in Bankruptcy and Debt Relief Restrictions Cases

It is possible for more than one allegation to be made in each bankruptcy and debt relief restrictions case. Therefore, the number of allegations presented here does not match the number of restrictions orders and undertakings.

The allegations presented here relate to those restrictions orders and undertakings made in the year being reported on in this release, rather than the date the allegations were made.

For the 314 restrictions orders and undertakings in 2021/22, there were a total of 344 allegations recorded, as presented in Figure 7.

Figure 7: The most common allegation made in bankruptcy and debt relief restriction cases in 2021/22 was ‘Incurring debt without reasonable expectation of payment’

England and Wales, 2021/22

Source: Insolvency Service

Over one fifth of allegations (75) made in relation to restrictions order and undertakings in 2020/21 were related to individuals incurring debt without reasonable expectation of payment. This was the most common category for the second year in a row. Previously, neglect of business affairs had been the most common allegation type every year since 2010/11 until 2019/20.

6. Criminal Charge Outcomes

These statistics relate to individuals in England and Wales who have been charged with a criminal offence as a result of the work of the Insolvency Service or by other partner agencies within BEIS, for example Companies House, or directorates such as the Employment Agency Services Inspectorate. These statistics exclude criminal case outcomes for prosecutions for offences under Part 21 Companies Act 2006 relating to Information about People with Significant Control.

All underlying numbers for this section can be found in Worksheets 4-4c in the accompanying tables.

6.1 Criminal Prosecutions by Individual and Charges

In 2021/22, 130 individuals faced a total of 169 criminal charges (Figure 8). This was over twice as many compared as the number of individuals charged and the number of charges in 2020/21 and was also higher than recent pre-pandemic levels.

There was a higher number of outcomes in criminal cases in 2021/22 than in previous years. This follows a lower than usual number in 2020/21, when many cases awaited a hearing date, as a result of reduced court capacity during the pandemic, leading to a backlog. The increased capacity of courts at the start of the year resulted in many of these cases being taken forward.

92% of individuals who faced charges in 2021/22 were convicted. For full details, see Worksheet 4 of the accompanying tables.

Figure 8: The number of criminal charges brought by the Insolvency Service was higher in 2021/22 than in previous years

England and Wales, 2016/17 to 2021/22

Source: Insolvency Service

6.2 Criminal Convictions by Sentence Imposed

There were 424 separate sentences imposed in 2021/22 (Figure 9). The most common sentences imposed were community orders, which include a range of requirements such as unpaid work, curfews or periods of supervision. In 2021/22, 84 of these sentences were imposed. The next most common sentences were cost orders and victim surcharges.

Figure 9: The most common sentences for charges brought by the Insolvency Service were community orders and cost orders

England and Wales, 2021/22

Source: Insolvency Service

Multiple sentences can be imposed for the same charge, for example, combining a custodial sentence with a confiscation order, costs order and a victim surcharge. In some cases, the court may consider that no separate penalty is appropriate for a particular charge where the court has already sentenced on other matters.

6.3 Length and Size of Sentence Imposed.

Figure 10 shows that in 2021/22, 43 sentences of immediate imprisonment were imposed. Thirty-two of these sentences were for less than 12 months, eight were for between 12 and 24 months, and three were for more than 24 months. Eighty-two community orders were imposed. Community orders vary, with examples including unpaid work and rehabilitation orders, so these can have durations of either hours or months.

Figure 10: Forty-three sentences of immediate imprisonment were imposed in 2021/22 for charges brought by the Insolvency Service, with lengths ranging from less than 12 months to more than 24 months.

England and Wales, 2021/22

Source: Insolvency Service

Figure 11 shows that there were 203 financial orders made in 2021/22, with the most common type (82) being cost orders. More than half of cost orders (47) were for more than £1000, while all 61 victim surcharges were for less than £500. The remaining financial orders consisted of 42 fines and 18 other financial orders.

Figure 11: There were 203 financial orders made in 2021/22, including 80 for values in excess of £1,000

England and Wales, 2021/22

Source: Insolvency Service

7. Data and Methodology

7.1 Data Sources

Data are compiled from a range of administrative databases and spreadsheets held by the Insolvency Service. Details of the data sources are provided in the accompanying Enforcement Outcomes Methodology and Quality document.

7.2 Methodology and data quality

Detailed methodology and quality information for this statistical release can be found in the accompanying Enforcement Outcomes Methodology and Quality document.

The main quality and coverage issues to note:

1. The coverage of the statistics in this release differs throughout due to differences in legislation and policy across the United Kingdom. The geographic breakdown a particular series relates to is detailed throughout the commentary.

2. Enforcement outcomes are reported based on the date of the order or undertaking, rather than on the date it was recorded on the administrative system. In practice this means there is likely to be an element of under-coverage in the first release of new data.

3. These statistics report on enforcement outcomes obtained as a result of the work of the Insolvency Service. Therefore, any activity conducted outside of the Insolvency Service, or where the Insolvency Service has not had significant involvement, will be excluded.

4. Information presented on directors disqualified under the Company Directors Disqualification Act may not be consistent with information held by Companies House. Full reasons why are provided in the accompanying Enforcement Outcomes Methodology and Quality document.

7.3 Revisions

These statistics are subject to scheduled revisions, as set out in the Revisions Policy. 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. Such revisions tend to be small in the context of overall totals; nonetheless all figures in this release that have been revised since the previous edition have been highlighted in the relevant tables.

8. Glossary

Definitions are provided below for key terms only. Full definitions, including for all allegations, can be found in the accompanying Guide to Insolvency Service Enforcement Outcomes document.

Term	Definition
Allegations	Grounds for Orders and Undertakings to proceed (for both director disqualifications and bankruptcy and debt relief restrictions orders).
Bankruptcy	A form of debt relief available for anyone who is unable to pay their debts. Assets owned will vest in a trustee in bankruptcy, who will sell them and distribute the proceeds to creditors. Discharge from debts usually takes place 12 months after the bankruptcy order is granted.
Bankruptcy and debt relief restrictions Order or Undertaking	A legal order from the court that extends the length of time an individual may be subject to bankruptcy or Debt Relief Order restrictions. This order can be applied for a number of reasons, lasting anywhere between two and 15 years. In most cases, it is applied due to reckless, dishonest and fraudulent behaviour. If the individual accepts the allegations, they may offer to enter into a bankruptcy or debt relief restrictions undertaking. This has the same effect as an order but does not involve court proceedings.
Companies Wound Up in the Public Interest	Following an investigation into the corporate abuse by a limited company or limited liability partnership, the Insolvency Service can apply to the court to have the company put into compulsory liquidation, with a liquidator appointed to investigate and wind up its affairs. Corporate abuse could include serious misconduct, fraud, scams or sharp practice in the way the company operates. Winding up in the public interest can be a powerful tool to disrupt fraudulent or criminal behaviour by removing the companies used to perpetuate the crimes.
Debt Relief Order	A form of debt relief available to those who have a low income, low assets and debt no more than a specified value. There is no distribution to creditors, and discharge from debts takes place 12 months after the DRO is granted. DROs were introduced in April 2009. A change in eligibility criteria was introduced from 29th June 2021 in which the upper limit of debt increased from £20,000 to £30,000. In addition, the threshold on the value of assets that a debtor can hold and be eligible to enter into a DRO increased from £1,000 to £2,000; the value of a single motor vehicle that can be disregarded from the total value of assets increased from £1,000 to £2,000; and the level of surplus income received by the debtor before payments should be made to creditors increased from £50 to £75 per month.
Director disqualification Order or Undertaking	Order made by the court under the Company Directors Disqualification Act 1986 (CDDA) to disqualify a person or a specified period, from becoming a director of a company, or directly or indirectly being concerned or taking part in the promotion, formation or management of a company without permission from the court. If an individual accepts the allegations made against them, they can offer to enter into a disqualification undertaking. This has the same effect as a director disqualification order but does not involve court proceedings.
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.