The figures for April to June 2016 show that total company insolvencies were lower than the previous quarter and also decreased on the year, largely because of a fall in compulsory liquidations.

An estimated total of 3,617 companies entered insolvency in Q2 2016, which was 4.2% lower than Q1 2016 and 2.7% lower than Q2 2015. The estimated liquidation rate in the 12 months ending Q2 2016 was 0.42% of active companies, the lowest level since comparable records began in Q4 1984.

John Cullen, partner and corporate recovery specialist at Menzies LLP, said: ‘The reduction in compulsory liquidations is a significant victory for business recovery. Previously firms have been held back by a lack of viable turnaround options, with too many succumbing to failure under pressure from creditors and HMRC rather than being able to fulfil ‘time to pay’ agreements. This trend shows that access to advice is improving – the continuation of this is vital if struggling firms are to achieve recovery.’

Ian Gould, business restructuring partner at BDO, said the decrease ‘does not come as a great surprise’, but warned that what he called ‘a post-Brexit decline in confidence’ could see insolvency levels start to increase.

‘Whilst we have witnessed a broad downward trajectory in the number of insolvencies in recent years, it is likely that we will experience a sharp rise over the next twelve months as recent policy changes and a rapidly evolving global economy begin to bite. Anecdotally, many banks and directors are beginning preliminary investigations and this may manifest in increased calls for restructuring strategies and, possibly, business failures,’ Gould said.

Total individual insolvencies increased for the fourth consecutive quarter, driven primarily by an increase in individual voluntary arrangements (IVAs).  Debt relief orders also increased, because of a change to the eligibility criteria, but the Insolvency Services says it is too early to gauge the effect of the change from court-based to online bankruptcy applications.

The number of people who became insolvent in England and Wales was 22,503 in Q2 2016, a 6.9% increase on the previous quarter, and 22.4% higher than the same quarter in 2015. There were 12,225 IVAs in Q2 2016, which was 15.4% higher compared to Q1 2016 and 42.7% higher compared to the same period in 2015.

Mark Sands, personal insolvency partner at RSM, said the uplift in people entering IVAs could be the result of debt advisers have been signposting more people towards IVAs rather than towards more informal debt management plans because of a compliance clampdown by the regulator.

‘We’ve also seen a 16% rise in debt relief orders versus Q2 last year, which will be largely be due to a change in criteria which has enabled people with debts of up to £20,000 to use this as a route to deal with problem debts. Around a quarter of DROs in this period involved debt greater than the previous threshold of £15,000’ Sands said.

Matthew Chadwick, head of personal insolvency (England & Wales) at BDO, argued that government initiatives are likely pushing the insolvency figures in contrasting directions.

‘Last October’s increase in the bankruptcy threshold level from £750 to £5000 should now be driving a downturn in bankruptcy numbers. However, at the same time, the introduction of online bankruptcy applications, designed to reduce the costs of filing debtors’ petitions, will have the opposite effect by making it easier for individuals to enter bankruptcy than ever before,’ he said.

Looking ahead, Chadwick said Brexit ‘raises innumerable question marks’, but warned that a shock to the economy, could cause increasing numbers of insolvencies as individuals struggle to service debts.

Insolvency Service statistics are here.