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Insolvency Statistics for the April to June 2020 quarter: period of tranquillity before chaos?

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30 July 2020, the Insolvency Service published its quarterly insolvency statistics for April to June 2020.

Surprisingly despite these tentative times, company insolvencies in England and Wales have declined by one-third compared to the same quarter ending June 2019 (Q2 19).

By way of a breakdown, and by comparing Q2 20 with Q2 19, the numbers of:

  • Company voluntary liquidations (CVLs) fell by 24%
  • Compulsory liquidations (i.e. court-ordered liquidations) fell by 76%
  • Company voluntary arrangements (CVAs) fell by 49%, and
  • Administration appointments fell by 10%

This is less startling when taken in the context of the package of temporary reliefs provided to businesses by the Government, such as:

  • Restrictions on landlords taking action against tenants for unpaid rents
  • The Coronavirus Job Retention Scheme (also known as the furlough scheme)
  • HMRC deferrals for tax liabilities, and
  • The retrospective nature of the Corporate Insolvency and Governance Act 2020 with enforced restrictions on bringing winding up actions and relaxation of the wrongful trading regime

These reliefs have provided temporary "breathing space" for businesses, which is likely to be a significant factor in the reduction in corporate insolvencies for Q2 20.

What remains to be seen, of course, is whether there will be a spike in company insolvency figures once the temporary reliefs come to an end. For example, debts, unpaid rent and deferred tax liabilities continue to accrue. If companies are suffering from the impacts of COVID-19, such as closures, reduced trading and ongoing disruption, it is inevitable that such companies are going to struggle to meet their ongoing liabilities as they fall due and the restrictions ease / fall away.

The results provide optimism, however once the measures put in place to provide breathing space come to an end, the economic reality will come to the fore.

The next quarterly insolvency statistics (due to be released on 30 October) may portray a different picture, especially if the temporary measures that currently provide breathing space are not extended past this autumn.

Those businesses uncertain of their position should take impartial, pragmatic and commercial strategic professional advice as soon as possible.

We at mfg Solicitors are here to help.

Want an initial speculative free of charge discussion? Contact Partner, Samuel Pedley on 01562 5161198 / 07391 417090 or