These show that an estimated total of 3,539 companies entered insolvency in Q3 2015, which was 4.4% less than Q2 2015 and 10.2% lower than Q3 2014. Over the same period there were a total of 19,683 individual insolvencies, 2.8% higher than Q2 2015 but a decrease of 18.5% compared to Q3 2014.

The drop in company failures was mainly driven by a decrease in compulsory liquidations, which fell to the lowest level since Q3 1989. A total of 612 companies were subject to a compulsory winding-up order in Q3 2015, a 20.4% decrease on the previous quarter and 29.2% lower than Q3 2014. Overall, the estimated liquidation rate in the 12 months ending Q3 2015 was 0.46% of active companies, the lowest level since comparable records began in Q4 1984.

The increase in personal insolvency was down to a rise in individual voluntary arrangements (IVAs), the first such increase since Q2 2014. There were 10,197 IVAs in Q3 2015, which was a 9.3% increase compared to Q2 2015 but 17.9% lower than Q3 2014. The number of bankruptcies and debt relief orders continued to decline.

Phillip Sykes, president of R3, the insolvency trade body, said: ‘Personal insolvencies have generally been falling since the recession: although insolvencies are up this quarter from last quarter, they are well below where they were this time last year. Economic recovery is finally making a big dent in insolvency numbers which ballooned pre-2009.

‘The numbers of corporate insolvencies continue their long and slow decline since their peak in the recession. Although this week’s growth figures show businesses aren’t exactly flying, not too many are really struggling either.’

In comparison, company insolvencies in Scotland in Q3 2015 went up by 8% to total of 216. Of these, 163 were company liquidations – an 8.7% increase on the same quarter of 2014. Liquidations were fairly stable until 2009, followed by a generally increasing trend until a period of rapid decrease between Q2 2012 and Q1 2013.

The Insolvency Service says the total number of company liquidations in Scotland is driven by the number of compulsory cases. This is in contrast to England and Wales, where the number of creditors’ voluntary liquidations (CVLs) account for the majority of company liquidations. This difference may be because in England and Wales, the Insolvency Service manages the initial stage of case administration for all compulsory liquidations, for which a fee is charged.

However, individual insolvencies in Scotland fell substantially to 2,230, 25.4% lower than the same quarter in 2014. There were 965 sequestrations in Q3 2015, a decrease of 41.7% compared to Q3 2014.

New legislation covering sequestration came into effect on 1 April 2015. Among other things, this introduced mandatory debt advice for individuals seeking statutory debt relief, a common financial tool to assess individuals’ ability to contribute to repaying their debts, and a new web-based application form. The Accountant in Bankruptcy, which handles Scottish insolvencies, has suggested that the large decrease in Q2 2015 may be in part because of money advisors, the insolvency industry and debtors needing to familiarise themselves with new processes.

Looking ahead, the Insolvency Service says on 1 October 2015, changes to bankruptcy and DRO criteria were implemented, which could affect the statistics. The minimum debt a creditor must be owed to petition to make someone bankrupt increased from £750 to £5,000. It is expected that this change will lead to a decrease in the number of creditor petition bankruptcies, but since there can be a time lag between the petition being presented and an order being made this may not become apparent in the statistics immediately.

DROs are now available to people with up to £20,000 debt (up from £15,000) and £1,000 assets (up from £300). The surplus income limit for DROs was unchanged at £50 per month. It is expected that this change will lead to a decrease in the number of debtor petition bankruptcies.

The level of debtor petition bankruptcies has been following a generally decreasing trend since 2009. Creditor petition bankruptcy numbers were at their highest level since Q3 2014, but have been steadily decreasing since Q4 2011.

Latest insolvency statistics are here

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