CompanyRescue Scotland? Is there a genuine rescue culture in Scotland"?
We have done some research on the national insolvency statistics and the results are shocking if you run an insolvent or struggling Scottish company. Amazingly, in Scotland in 2009, only 1% of insolvent companies were rescued by a company voluntary arrangement or CVA!
I think that is staggering! It is a small country of course, but here are the 2007 statistics that shows the "Rescue Culture" has largely passed Scottish business and the insolvency profession by:
2009 Half year Insolvency Statistics -Scotland only:
•307 Scottish companies were liquidated and of those more than 75% were wound up by creditors and the Court. Only 25% were voluntary liquidations initiated by the directors.
•97 companies entered administration in H1 2009, versus 47 last year.
•As for CVA only 4, yes you read that correctly, FOUR were saved by the CVA tool which is scandalous waste of good businesses. Incidentally the Government also wants more companies to use CVA! I suppose the fact that this was 2 more than last year means the use of CVA's grew by 100%! PS we led 3 of the 4.
•CompanyRescue wrote 4 CVA's in Scotland 2007 or 75% of the total approved. In 2008 we proposed 3 of the 4 in total.
•Of the total stock of Scottish insolvencies of 361 in 2009, some 58% were aggressive liquidations by creditors.
•Taking Administrations and CVA'sas "rescue" tools only 15% of all Scottish insolvencies were rescues. Around 1% used a CVA.
Therefore we could argue BURIAL accounted for 85% of all Scottish Insolvencies in H1 2009.
So the standard approach in Scotland seems to be - if a company is struggling, whack in a winding up petition and knock the company over. The HMRC people in Scotland are very supportive of rescues and would much rather see the company survive in CVA than be liquidated and start again.
We have never had a CVA rejected by HMRC in Scotland. We have a good working relationship with HMRC Scotland over CVAs.
If you are a solicitor or accountant advising distressed Scottish companies, please make sure they are aware of CVAs! Or if you are a director of a Scottish business please call your only hope of a rescue - KSA Group!
Source of Statistics is the Insolvency Service see below.