Date: 29 November 2012
INDIVIDUAL VOLUNTARY ARRANGEMENTS: OUTCOME STATUS OF NEW CASES REGISTERED BETWEEN 1990 AND 2011, ENGLAND AND WALES
Statistics showing the outcome status of Individual Voluntary Arrangements (IVAs) in England and Wales registered between 1990 and 2011 are published today (29 November) by the Insolvency Service. These statistics, recording the status as at September 2012, are shown in Figure 1 below and Table 1 at the end of the main Release. Table 1 can be downloaded here.
Number of registrations
Source: Insolvency Service, September 2012
The number of new IVAs registered each year has increased substantially over the period covered, from less than 10,000 annually up to 2003, to a peak of over 50,000 in 2010. The upward trend in registrations was particularly steep between the years 2004 and 2006, where there was a more than four-fold increase from 10,725 registrations in 2004 to 44,084 in 2006. The numbers dipped in 2007 and again in 2008, then increased to reach a level of about 50,000 per year in 2010 and 2011.
The trend in IVA registrations during the period from 2004 onwards is broadly in line with the pattern for total individual insolvencies (although bankruptcy orders continued to rise to a peak in 2009, and the introduction of debt relief orders has impacted total numbers from 2009 onwards). The rapid increases in new individual insolvency cases from 2004, in particular, are considered to be related to households taking on higher levels of debt from the early 2000s, as well as more general economic factors. Figure 3 at the annex shows trends in each type of individual insolvency since 1990.
For IVAs themselves, the rapid increase from 2004 to 2006 coincided with a number of firms setting up as volume providers of IVAs, with attendant advertising of the service on offer. Commentators have suggested that the subsequent reduction in new registrations for 2007 and 2008 may be related to less cases being approved by creditors where the dividend on offer was below a specified level. In response to concerns raised, the Insolvency Service led the development of a voluntary agreement aimed at encouraging best practice and streamlining the process for straightforward consumer IVAs. The IVA Protocol has been in effect since February 2008 and was updated in May 2010 (see Note 2).
The number of IVAs registered each year that have failed and resulted in the arrangement being terminated (by September 2012) has broadly followed the trend in overall registrations described above. It should be noted, however, that the final numbers for the most recent years are not yet known, as a large proportion of IVAs are still ongoing (see Note 8).
In percentage terms, the trend in IVAs which have failed is shown at Figure 2 below.
Percentage of registrations terminated
Source: Insolvency Service,
Between the years 1990 and 2002, inclusive, the percentage of IVAs registered that resulted in termination remained fairly steady at around the 30% mark (the lowest figure in this period being 28% for 2001 registrations and the highest 33% for 1995 registrations). The percentage of terminations has since followed a generally upward trend from 30% for 2002 to the level for 2007 registrations, which currently stands at 37%. As at September 2012, nearly 50% of IVA registrations in 2007 were still ongoing (Table 1 below), so this figure is likely to increase going forward; for the most recent years a trend has not yet emerged as a high percentage of IVAs are still ongoing (as shown below, 2004 is the final year where the final status is known for over 95% of registrations).
Insolvency Service internal analysis suggests that, historically, upwards of 50% of those IVAs that ultimately fail, do so and are terminated within two years of registration. It is not possible to discern from the statistics published here whether this trend holds for the most recent IVA registrations.
Insolvency Service, September 2012
Number of new cases
Source: Insolvency Service
Notes to accompany the Individual Voluntary Arrangement outcome statistics
1. An Individual Voluntary Arrangement (IVA) is an alternative formal debt solution to bankruptcy and was established by Part VIII of the Insolvency Act 1986. It is a legally binding agreement between a debtor and his/her creditors about how the debts will be paid (either in full or in part). An application is made to court and an insolvency practitioner is appointed to supervise the arrangement. More detail is available here: alternatives to bankruptcy
2. Details of the current IVA Protocol in use since May 2012 and the ‘2008 Protocol’ which preceded it may be found on the Insolvency Service website here : The Straightforward Consumer IVA Protocol.
3. Individual insolvencies in England and Wales comprise bankruptcy orders, individual voluntary arrangements and, since 6 April 2009, debt relief orders; details are available on the Insolvency Service website : http://www.bis.gov.uk/insolvency/personal-insolvency. Policy responsibility for individual insolvency in Scotland and Northern Ireland lies within the devolved administrations.
4. Definition of terms
a) Completion: where the supervisor has issued a certificate (“the completion certificate”) stating that the debtor has complied with their obligations under the arrangement.
b) Termination (failed): where the supervisor has issued a certificate (“Certificate of Termination”) ending the arrangement because of the debtor’s failure to keep to the terms of the arrangement.
c) Ongoing (Current): where the arrangement is continuing.
d) Revoked or suspended: where an application to court has been made to challenge the decision of a meeting approving an IVA, the court may revoke or suspend the approval or call for further meetings to be held. Notification of such action should be forwarded to the Secretary of State within 7 days of the making of the order.
Background and explanation of data
5. The Insolvency Service first published these figures in 2010, implementing a recommendation from the Insolvency Practices Council (IPC) to publish annual statistics showing the current status of IVAs set up since their introduction.
6. These statistics were not published in 2011 due to initial data quality issues following a major refresh to the Insolvency Service's IT systems. It is anticipated that they will be updated at least annually going forward.
7. The total figures for each year are not entirely consistent with those published in the quarterly Insolvency Statistics release. This is because the IVA outcome figures have been compiled using a bespoke extract from a live database, whereas the headline figures for earlier years were produced using a different reporting system. Additionally, some IVA registrations will have subsequently been revoked or suspended, or found to have been registered in error; these are not included here. This edition excludes IVA registrations from 1987 to 1989 inclusive as the discrepancies for these years were unacceptably high.
8. The duration of an IVA will vary, although it is common for an arrangement to be for a 5-year period. One factor that therefore needs to be taken into account when interpreting the data for those IVAs registered in the later years is that there will be fewer completions, and possibly fewer failures, as a large proportion of these arrangements will not have reached their full term and are still ongoing. This means that for the most recent years, failure rates should be interpreted with caution, as should trends in these over time.
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