Business valuers may be seeing less insolvency work as government measures to minimise insolvencies reduced registrations 38% in the first quarter of the year, as reported in the UK’s latest quarterly company insolvency statistics, published on 30 April. The previous Q4 2020 also saw fewer insolvency registrations than the same period in 2019.

These data reflect registrations, rather than procedure start dates, so the decrease compares to data before the impact of COVID-19 or the implementation of government efforts. The trend remains, but the report acknowledges the range of government support put in place currently. No one is certain whether a surge in insolvencies will be triggered when these protective measures are lifted.

For now, all types of insolvencies have been reduced, the report shows:

• Creditors’ voluntary liquidations made up the clear majority of insolvencies in Q1 2021, but these are still down 24% on 2020;
• Administrations have been stable across the quarter but are still 52% lower than the same period in 2020;
• Compulsory liquidations have declined the most and are 26% lower than the previous quarter and 85% lower than Q1 2020 (not surprising as restrictions on the use of statutory demands and winding-up petitions remain in place);
• In Q1 2021, no companies obtained a CIGA moratorium and only two companies had a restructuring plan sanctioned by the court; and
• CVAs are also down 54% and 46% on Q4 2020 and Q1 2020, respectively. The report notes that Q1 is traditionally the most popular period for CVAs but that companies hesitated this year while the Virgin Active, New Look, and Regis cases were resolved. These protections end on 30 June.

There may be a rush of insolvencies currently suppressed by the government measures after the introduction in June 2020 of the Corporate Insolvency and Governance Act 2020 (CIGA), which was rushed through the UK Parliament in a five-week period. As the biggest change to the UK’s insolvency and restructuring legalisation in over 20 years, one of the cornerstones of this new legislation is the introduction of the Restructuring Plan. COVID-19 aside, a wide range of restructuring options has already been implemented within a Restructuring Plan—for example, a solvent recapitalisation (Virgin Atlantic), a combination of debt-for-debt and debt-for-equity swaps (PizzaExpress), and, most recently, a solvent wind-down (DeepOcean).