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 department for Business Enterprise
and Regulatory Reform (BIS), 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 BIS. The latest figures are those for
2006, and were issued in a BIS press notice on 22 August 2007.
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 2006 at 4.5 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. Seasonal
adjustment is a process by which changes that are due to
seasonal or other calendar influences are removed to produce a
clearer picture of the underlying behaviour of the data series.
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 and Table 7 for
Scotland.
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 Tables 1 and 6. These provisions came
into force on 15th September 2003 and Administrations
under the Enterprise Act have been included on Tables 3 and
7 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 individual
voluntary arrangements (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 procedures (IVAs and Deeds of Arrangement
are included under a single column) and Table 2b provides
bankruptcy orders further split by petition type. Changes to
bankruptcy law in England and Wales 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.
Table 2c records numbers
of Income Payments Orders (IPOs) and Income Payments Agreements
(IPAs) where the bankrupt makes regular payments from surplus
income towards his/her debts for a period of time, either by
court order or by agreement. The figures record numbers of IPOs/IPAs
made in each period, they do not, in general, relate to the date
of the original bankruptcy order. Table 2c records a number of
IPAs before Q2 2004 because the
IPA provisions of the Enterprise Act 2002 (commenced on 1 April
2004) were applicable, upon commencement, to pre-commencement
bankruptcies.
11.
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.
12.
Insolvent individuals in Northern Ireland are dealt with
under the Insolvency (Northern Ireland) Order 1989 and are
recorded under Table 8. 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.
13.
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.
14.
Company liquidations and bankruptcy orders (relating to
the self-employed) in England and Wales broken down by industry
are not currently available for publication following
development work to update the classification of new cases to
the Standard Industrial Classification (SIC) 2003.
This will bring them into line with other official
statistics. Industry
breakdowns for England and Wales are published one quarter in
arrears of the headline series and figures according to the
previously used Insolvency Trade Classification (ITC) are
available up to Q3 2006. However, the broad split of bankruptcy
orders into self-employed and other individuals is available
under Table 2b.
15.
Company liquidations in Scotland are available from Q1
2007 based on the SIC2003 industry breakdown and these can be
found in Table 6b. Earlier data are available separately
classified according to the Insolvency Trade Classification
(ITC).
16.
Information concerning insolvency legislation and
procedure in England and Wales may be obtained from the
Insolvency Service website at www.insolvency.gov.uk.
Additionally, details of recent insolvency research and policy
evaluation can be found at http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/insolvencylaw.htm.
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