More and more companies are opting for insolvency

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The number of companies choosing to go into liquidation has reached its highest level since the start of the Covid crisis, according to new government figures.

But data from the Insolvency Department shows that other forms of bankruptcy are actually lower than they were before.

There were 1,446 bankruptcies of voluntary creditors’ liquidation companies (CVLs) in England and Wales in September, up from 1,349 in August and an increase of 928 or 56% over the same period of the year last.

CVLs are where the shareholders of a company pass a resolution that it should be liquidated voluntarily.

Despite the new high, the figures are 4% lower than the number recorded two years earlier (1,510 in September 2019).

Other types of business insolvencies, such as court-ordered liquidations, remained lower.

And for individuals, there were 614 registered bankruptcies, 42% less than in September 2020 and 55% less than in September 2019.

The number of Debt Relief Orders (DROs) in September 2021 was at its highest level since the start of the Covid crisis, with 2,150 DROs recorded. The upper debt limit for a DRO was recently increased from £ 20,000 to £ 30,000.

A DRO is a form of debt relief available to those with low income, low assets, and debt no more than the specified value. There is no distribution to creditors and the release of debts takes place 12 months after the granting of the scrutineer.

The number of registered DROs was 41% higher than in September 2020 but remained below pre-Covid levels (12% lower than in September 2019).

The report says the overall number of business and individual insolvencies has remained low compared to pre-Covid levels.

He says: “While the number of CVLs is now slightly higher than pre-pandemic levels, the number of other insolvency proceedings, such as forced liquidations of companies and bankruptcies of individuals, remains lower. is likely due in part to government measures put in place to support businesses and individuals during the pandemic. ”


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