New cases of insolvency in Northern Ireland fell for the fourth consecutive year in 2017/18 and to their lowest rate since 2009/10, figures from the Department for the Economy’s Insolvency Service show.
The total number of new bankruptcies, liquidations and debt relief orders fell to 1,476 in 2017/18, having reached an all-time high of 2,177 in 2013/14.
Bankruptcies and company liquidations fell by 18 per cent and 42 per cent respectively, while debt relief orders increased by 37 per cent. The figures are published in the Insolvency Service Annual Report and Accounts for 2017/18.
Richard Monds, Director of the Northern Ireland Insolvency Service, says that these trends reflect the generally positive position of the local economy: “We very much welcome the continued decline in the overall numbers of insolvencies in Northern Ireland. This steady decrease in recent years is indicative of the resilience of local businesses amidst tough conditions.
“There are, however, many complex and diverse factors that can cause insolvencies at both corporate and personal levels. The Insolvency Service ensures that the various forms of insolvency are discharged effectively, and puts in place debt recovery measures where appropriate. This in turn helps foster confidence within the business community.”
Mr Monds continued: “It is worth highlighting that, while the overall total of insolvencies has fallen, there has been a significant increase in debt relief orders. These orders are a form of bankruptcy, administered by the Insolvency Service, for individuals with lower levels of debt and few assets. While any personal bankruptcy is clearly traumatic for the individual concerned, the use of a debt relief order provides a more affordable means of formal debt relief, and court action is avoided. Like bankruptcy, if the order is fully adhered to, the individual is freed from their debt after 12 months.”
The Insolvency Service Annual Report and Accounts also highlight that payments of £6.67million were made in respect of dividends to creditors.
Figures available for the nine-month period to 31 December 2018 indicate that the downward trend of insolvencies is continuing, with a total of 933 cases compared with 1,133 in the same period the previous year.
Mr Monds also highlighted how insolvency has changed over time: “In recent years, formal insolvency procedures have moved away from a punitive approach and now focus on financial rehabilitation of individuals and on rescue and restructuring of companies to avoid insolvency.”
He pointed out, however, that the Insolvency Service has significant powers which it uses where individuals have been shown to have acted recklessly: “We investigate all cases and will apply to the courts to issue restriction or disqualification orders to individuals or company directors who act improperly. We took enforcement action in 72 cases in 2017/18, an increase of 14 per cent on the previous year. These orders place a ban on those who receive them from running a business and act as a strong deterrent to prevent misconduct. This is in the interest of both the business community and the wider public.”
Mr Monds concluded by highlighting the importance of seeking debt advice at an early stage: “All formal insolvency processes are stressful for those involved and the most frequent comment we hear in our dealings with bankrupts is their regret that they had not taken action earlier to resolve their debt problems. There are many sources of debt advice in Northern Ireland and I urge anyone with money worries to seek help at an early stage to avoid having to enter a formal bankruptcy or insolvency process.”
More information on personal insolvency and debt is available on nidirect.
Business-specific information is available on nibusinessinfo.
Notes to editors:
- The Insolvency Service Annual Report and Accounts for 2017/18 is available at: Insolvency Service Annual Report 2018
- More information on the Insolvency Service is available at: Insolvency Service.
- Follow us on Twitter @economy_ni
- For media enquiries contact the Department for the Economy Press Office on 028 9052 9604 or email firstname.lastname@example.org . Out of office hours please contact the Duty Press Officer on 028 9037 8110.