04 Aug 2014

Scottish Corporate Insolvencies Rise 36% Year on Year

Scottish Corporate Insolvencies Rise 36% Year on Year

Leonie Donald, Partner, examines the latest figures released by the Accountant in Bankruptcy which highlighted a near 36% year on year increase. 

Leonie Donald, Partner, examines the latest figures released by the Accountant in Bankruptcy which highlighted a near 36% year on year increase. 

The Accountant in Bankruptcy (“AiB”) has this week released figures highlighting a near 36% year on year increase in the number of registered Scottish companies becoming insolvent or entering into receivership. 

250 Scottish companies were reported to have failed in the second quarter of 2014, marking a year on year rise of 35.9%. A breakdown of the figures shows that in the three months leading up to 30 June 2014, there were 188 compulsory liquidations and 62 creditor’s voluntary liquidations in Scotland.  During the same time frame Her Majesty’s Revenue and Customs issued 140 Petitions to Wind Up notices to Scottish companies. The news this week follows a similar pattern of rising figures for corporate insolvencies in Scotland over the last few quarters.

Business restructuring specialist Begbies Traynor issued a report last week suggesting that the number of companies in Scotland facing financial hardship was on the increase in contrast to the rest of the UK; their latest Red Flag report stated that the said financial hardship for Scottish companies had risen by 22% in the second quarter, whereas the UK as a whole experienced a 9% reduction.

The figures come in stark contrast to the additional news this week from the AiB that the number of recorded personal insolvencies in Scotland is in fact at their lowest in nearly a decade, boasting a substantial decrease of 25.8% compared to the second quarter last year.  The Scottish Government have stated that the use of their Debt Payment Programmes (DPPs) under their Debt Arrangement Scheme have aided the Scottish people in managing their finances.  Indeed, the number of Protected Trust Deeds (PTDs) issued has declined in popularity, down two-fifths in the first quarter of 2014/15, with the governments DPPs growing in popularity by offering individuals a longer period in which to pay off their debt. 

The positive outcome for personal insolvencies is said to be linked to a greater update in the DAS scheme but it is clear that there is still some way to go for businesses despite the gradual improvements in the economy.  

Leonie Donald, Partner


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