Reference  INS/Com/41
Date  2 February 2007

STATISTICS RELEASE: INSOLVENCIES IN THE FOURTH QUARTER 2006

Statistics showing insolvencies in the fourth quarter 2006 are published today (2 February) by the Insolvency Service.

There were 3,194 liquidations in England and Wales in the fourth quarter of 2006 on a seasonally adjusted basis. This was a decrease of 1.4% on the previous quarter and a decrease of 0.1% on the same period a year ago.

This was made up of 1,411 compulsory liquidations, an increase of 4.9% on the previous quarter and an increase of 9.7% on the corresponding quarter of the previous year, and 1,783 creditors voluntary liquidations, a decrease of 5.9% on the previous quarter and a decrease of 6.7% on the corresponding quarter of the previous year.

0.6% of active companies went into liquidation in the twelve months ended Q4 2006, a decrease from 0.7% in the previous quarter and the corresponding quarter of 2005.

There were 29,804 individual insolvencies in England and Wales in the fourth quarter of 2006 on a seasonally adjusted basis. This was an increase of 7.1% on the previous quarter and an increase of 44.1% on the same period a year ago.

This was made up of 17,063 bankruptcies, an increase of 9.6% on the previous quarter and an increase of 24.8% on the corresponding quarter of the previous year, and 12,741 Individual Voluntary Arrangements (IVAs), an increase of 3.9% on the previous quarter and an increase of 81.9% on the corresponding quarter of the previous year.

The following tables present recent trends in insolvencies in Scotland and Northern Ireland, complementing those for England and Wales above (longer series back to 1998 are presented in the accompanying detailed tables).

Notes to Editors 

1. The official Insolvency Statistics are the most comprehensive record of the number of corporate and individual insolvencies in England and Wales. Insolvencies in Scotland and Northern Ireland are also included, but are shown separately as they are covered by separate legislation, there are some differences in definition, and policy responsibility for them lies within the devolved administrations. 

2. The statistics for England and Wales are derived from administrative records of the DTI Insolvency Service and Companies House Executive Agencies. For Scotland, the company insolvency statistics are derived from administrative records at Companies House, Scotland. Figures for individual insolvencies in Scotland are provided by the Office of the Accountant in Bankruptcy (AIB). The Northern Ireland statistics are derived from administrative records of the DETI Insolvency Service and Companies Registry. 

3. Numbers of insolvencies are not directly comparable with official estimates of business stock, formations or closures. 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 2005, and were issued in a DTI press notice on 24 October 2006. 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 2005 at 4.3 million. 

4. The X11ARIMA program (developed by Statistics Canada) is used for the seasonal adjustment of the insolvency statistics for England and Wales, this being the recommended program within UK National Statistics. The data series covering Scotland and Northern Ireland do not demonstrate consistent seasonality and only the raw (unadjusted) series are presented. 

5. Insolvent companies in England & Wales and Scotland are dealt with under the Insolvency Act of 1986 and, in Northern Ireland, by the Insolvency (Northern Ireland) Order 1989. They can either be the subject of a compulsory liquidation (winding-up) order obtained from the court by a creditor, shareholder 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, registered at Companies House/Companies Registry). In either case they are said to have been wound-up, and numbers are given in Tables 1, 6 and 8. A third type of winding-up, members' voluntary liquidation, is not included because it does not involve insolvency. 

6. The Insolvency Act 1986 and, in Northern Ireland, the Insolvency (Northern Ireland) Order 1989 also introduced the procedures of company administration orders and company voluntary arrangements (CVAs). 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 CVA procedure aids business by enabling a company in financial difficulty to come to a binding agreement with its creditors. These are listed separately under Table 3 for England and Wales. 

7. 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 CVAs) 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 15^th 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). On 27th March 2006 the Insolvency (Northern Ireland) Order 2005 introduced similar revisions to the corporate administration procedures in Northern Ireland, replacing Part III of the Insolvency (Northern Ireland) Order 1989 with Schedule B1. 

8. Receivership appointments comprise administrative receivers appointed under the 1986 Act (and the 1989 Order for Northern Ireland) 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] (Insolvency [Northern Ireland] Order 2005 [Article 5]) have made some changes to the procedures for administrative receivership. 

9. Individual insolvencies in England and Wales and in Northern Ireland are made up of bankruptcy orders and individual voluntary arrangements (IVAs). 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 or more of his creditors when the court is satisfied that there is no prospect of the debt being paid. (Figures for bankruptcy orders include orders relating to the estates of deceased debtors). There are also IVAs and deeds of arrangement (the latter under the Deeds of Arrangement Act 1914), which enable debtors to come to an agreement with their creditors. Table 2 summarises the above types of individual insolvencies (IVAs and Deeds of Arrangement are now included under a single column). Changes to bankruptcy law introduced by the Enterprise Act 2002 came into force on 1 April 2004 – the Act made no changes to the existing individual voluntary arrangement regime. 

10. Insolvent individuals in Scotland (Table 6) are subject to sequestration (bankruptcy) or protected trust deeds under the Bankruptcy (Scotland) Act 1985 (as amended). This Act was amended by the Bankruptcy (Scotland) Act 1993. Protected trust deeds are voluntary arrangements in Scotland, but although they fulfil much the same role as individual voluntary arrangements, there are important differences in the way they are set up and administered. Details of both sequestrations and protected trust deeds are found on the register of insolvencies which is maintained by the Accountant in Bankruptcy. Further information about insolvency in Scotland can be found on the Accountant's website at www.aib.gov.uk. 

11. Insolvent individuals in Northern Ireland are dealt with under the Insolvency (Northern Ireland) Order 1989. On 27 March 2006 the Insolvency (Northern Ireland) Order 2005 came into operation and implemented similar changes to bankruptcy procedures as the Enterprise Act 2002 introduced in England and Wales. Further information about insolvency in Northern Ireland can be found on their website at www.insolvencyservice.detini.gov.uk. 

12. Under the Insolvency Act 1986 and the Insolvent Partnerships Order and, in Northern Ireland, the Insolvency (Northern Ireland) Order 1989 and the Insolvent Partnerships Order (Northern Ireland) 1995, insolvent partnerships may be wound up as an unregistered company or administered following bankruptcy orders against the partners. Insolvent Partnerships can also enter administration or a voluntary arrangement. 

13. Company liquidations in England & Wales and Scotland are also presented broken down by industry. For bankruptcy orders, the self-employed are shown separately and with a similar industry breakdown. The industry breakdown for cases in England and Wales is only available one quarter in arrears of the headline series. Work is in hand to update the classification of new cases to the Standard Industrial Classification (SIC) 2003 to bring them into line with other official statistics, with a view to publishing new case statistics according to SIC2003 later this year. 

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 – www.statistics.gov.uk

1. Company Liquidations in England and Wales
2. Individual Insolvencies in England and Wales
3. Receiverships, administrations and company voluntary arrangements 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. Insolvencies in Northern Ireland (not seasonally adjusted)
9. Annual rate of company Liquidations (for latest 12 months) - Company Liquidations in England, Wales and Scotland as a percentage of the number of companies registered

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