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Notes to Editors

1. The Official Insolvency Statistics are the most comprehensive record of the number of insolvencies and bankruptcies and provide a more accurate picture for analysing business conditions. The figures include businesses and individuals, with a breakdown by type of insolvency procedure. The figures treat Scotland separately (as insolvencies are defined differently in Scotland) and give an industrial analysis (for which the figures for England & Wales are published one quarter in arrears).

2. The statistics are derived from administrative records of the DTI Insolvency Service and Companies House Executive Agencies. The figures for company liquidations are made up of compulsory liquidations (winding-up orders made by the courts) and creditors' voluntary liquidations registered at Companies House. Figures for individual insolvencies comprise bankruptcy orders and individual voluntary arrangements under the Insolvency Act 1986 and deeds of arrangement under the Deeds of Arrangement Act 1914. Individual voluntary arrangements and deeds of arrangement are now included under one column.

3. Numbers of insolvencies are not directly comparable with numbers of new business formations. Statistics of business start-ups and closures that are directly comparable with each other have been assembled from VAT records and are published by the Department of Trade and Industry. The latest figures are those for 2004, and were issued in a DTI press notice on 12 October 2005. More detailed figures are available via the on-line database NOMIS. Additionally, analysis into the number of firms in the United Kingdom estimated the total number of businesses at the start of 2004 at 4.3 million.

4. The X11ARIMA program (developed by Statistics Canada) is used for the seasonal adjustment of the insolvency statistics, this being the recommended program within UK National Statistics.

5. A company or individual with debts that they are unable to pay as they fall due is said to be insolvent.

6. Insolvent companies are dealt with under the Insolvency Act of 1986. They can either be the subject of a compulsory liquidation (winding-up) order obtained from the Court by a creditor, member or director or themselves pass a resolution, subject to the approval of a creditors' meeting that the company be wound up voluntarily (creditors voluntary liquidations). In either case they are said to have been wound-up, and numbers are given in Tables 1 and 6. A third type of winding-up, members' voluntary liquidation, is not included because it does not involve insolvency.

7. The Insolvency Act 1986 also introduced the procedures of company administration orders and company voluntary arrangements. The administration procedure gives a period of time during which creditors are restrained from taking action and a court appointed administrator puts forward proposals to deal with the company’s financial difficulties. The Company Voluntary Arrangement procedure aids business by enabling a company in financial difficulty to come to a binding agreement with its creditors. These are listed separately in Table 3.

8. The Enterprise Act 2002 introduced revisions to the corporate administration procedures, replacing Part II of the Insolvency Act 1986 with Schedule B1. These include the introduction of additional entry routes into administration that do not require the making of an administration order and a streamlined process for Administrations whereby a company can in some circumstances be dissolved without recourse to liquidation. The primary objective of administration (and of Company Voluntary Arrangements) is the rescue of the company as a going concern; where liquidation does result these cases will be recorded under the insolvency figures at Table 1. These provisions came into force on 15th September 2003 and Administrations under the Enterprise Act have been included on Table 3 from Q3 2003 (dissolution follows 3 months after a notice is filed with the Registrar of Companies, if no objections are raised by the court).

9. Receivership appointments comprise administrative receivers appointed under the 1986 Act and certain other receivership appointments, for example under the Law of Property Act 1925. Due to the use of the same statutory documentation for different types of receivership, it is not possible to give a breakdown between them. The provisions of the Enterprise Act 2002 (section 250) have made some changes to the procedures for administrative receivership from 15 September 2003.

10. For individuals the term bankrupt is used to indicate insolvency.

11. Insolvent individuals in England and Wales are dealt with mainly under the Insolvency Act 1986. A bankruptcy order is made on the petition of the debtor or one of his creditors when the Court is satisfied that there is no prospect of the debt being paid. (Figures for bankruptcy orders include administration orders, which are bankruptcy orders relating to the estate of a deceased debtor). On 1 April 2004 there was an increase in the amount of the petition deposit required before a bankruptcy order can be made. There was a significant rise in the number of bankruptcy orders made in the last two weeks before the increase in petition deposits became effective. There are also individual voluntary arrangements and deeds of arrangement, which enable debtors to come to an agreement with their creditors. Table 2 summarises all of the above types of individual insolvencies.

12. Insolvent individuals in Scotland are subject to sequestration under the Bankruptcy (Scotland) Act 1985. (There are no deeds of arrangement or individual voluntary arrangements in Scotland). The Bankruptcy (Scotland) Act 1993 amending the 1985 Act came into force on 1 April 1993 and will have affected the number of sequestrations in the Scottish Courts.

13. Under the Insolvency Act 1986 and the Insolvent Partnerships Order, insolvent partnerships may be wound up like an unregistered company or administered following bankruptcy orders against the partners.  Insolvent Partnerships can also enter administration or a voluntary arrangement.

National Statistics National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference. You can find a range of National Statistics on the Internet – http://www.statistics.gov.uk/

Press Enquiries: Lorna Dennis Insolvency Service Press Officer Public Enquiries Textphone (for those with hearing impairment) Press Office Fax	+44 (0)207 637 6279 +44 (0)20 7215 5000 +44 (0)20 7215 6740 +44 (0)20 7222 4382
Non Media Enquiries Statistics and Analysis Directorate: Margaret Sims Gary Mills	+44 (0)20 7215 3305 +44 (0)20 7215 3286
E-MAIL: margaret.sims@dti.gsi.gov.uk gary.mills@dti.gsi.gov.uk
INTERNET: http://www.dtistats.net/sd

Tables

1. Company Liquidations in England and Wales
2. Individual Insolvencies in England and Wales
3. Administrations, company voluntary arrangements and receiverships in England and Wales registered at Companies House (not seasonally adjusted)
4. Company Liquidations in England and Wales - Industrial analysis
5. Bankruptcies in England and Wales - Industrial analysis
6. Insolvencies in Scotland (not seasonally adjusted)
7. Company Liquidations in Scotland - Industrial analysis
8. Annual rate of company Liquidations (for latest 12 months) - Company Liquidations in England and Wales as a percentage of the number of companies registered

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