Individual Insolvencies rise by 28%
by David Carter on 10 November 2009
On 6th November 2009 The Insolvency Service published statistics showing insolvencies in the third quarter of 2009. They make for interesting reading, with some early good news for businesses, but a worrying trend for individuals and sole traders.
Individual Insolvencies
There were 35,242 individual insolvencies in England and Wales in the third quarter of 2009. This was an increase of 28.2% on the same period a year ago. This was made up of 18,347 bankruptcies (up 20.9%), 12,390 Individual Voluntary Arrangements (IVAs), (up 27.4%) and 4,505 Debt Relief Orders (DROs).
The Debt Relief Order is a new individual insolvency procedure which came into force on 6 April 2009 and which provides an alternative route into personal insolvency for certain categories of over-indebted individuals, subject to some restrictions. Some of those who had a DRO approved would have been declared bankrupt had the DRO route not been an option, but it is not possible to quantify this proportion.
In the third quarter of 2009, 85% of bankruptcies were made on the petition of the debtor, slightly down on the previous quarter and slightly higher than throughout 2008 as a whole.
Business Insolvencies
There were 4,716 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the third quarter of 2009 (on a seasonally adjusted basis). This was a decrease of 4.7% on the previous quarter but an increase of 14.6% on the same period a year ago.
Additionally, there were 1,578 other corporate insolvencies in the third quarter of 2009 (not seasonally adjusted) comprising 410 receiverships, 974 administrations and 194 company voluntary arrangements. In total these represented an increase of 9.3% on the same period a year ago.
At The Sheriffs Office we welcome the small signs of recovery in the business market, but there is a long way to go before companies can start to feel confident that their customers are all on a firm footing. This applies even more to individuals and sole traders.
The way forward is clear: companies and sole traders are struggling, so make sure you credit check carefully before doing business, manage your credit control rigorously and take prompt enforcement action where you need to, before it’s too late.
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Disclaimer: The statements and opinions expressed in this article are those of the author and do not necessarily reflect those of Sheriffs High Court Enforcement Ltd, trading as The Sheriffs Office. Sheriffs High Court Enforcement Ltd does not take any responsibility for the views of the author. The author will not be held responsible for any comments posted by visitors to this site. Please note that this article does not constitute legal advice. The author has used his best endeavours to make this article as accurate and complete as possible, but requests that the reader be aware that the law of England and Wales frequently changes. The author strongly advises the reader to take legal advice before embarking on any enforcement action.
