Scotland's Insolvency Service has recently released the latest statistics on both personal and corporate insolvencies.
Compiled by Accountant in Bankruptcy (AiB), an agency of the Scottish government, this data covers April to June 2017 (Q1 2017-18). The majority of the statistics are derived from AiB administrative records.
It also includes statistics on the Debt Arrangement Scheme, estimates for 2017-18, and a summary of their 2016-17 figures.
Summary of Scottish Insolvency Statistics
While the data focuses on personal and corporate insolvency statistics, we will concentrate on the latter. Here are the key findings:
The year 2016-17 saw 846 corporate insolvencies in Scotland. This may seem like a large amount, but this is actually 56 fewer than a year earlier. It seems that this downward trend has continued into the year 2017-18.
The number of Scottish corporate insolvencies has decreased from 265 in Q1 to 200. However, between Q4 2016-17 and now, the total number of corporate insolvencies increased by 29%.
This includes receivership appointments, compulsory liquidations and creditor's voluntary liquidations (CVL).
Findings show a 31% decrease in the number of members voluntary liquidations (or 'solvent liquidations').
AiB also looked into the types of corporate insolvency. Compulsory liquidations are the most common (118), followed by CVL (81) and receivership appointments (0) in Q1 17-18.
What does this mean for Scottish businesses?
While the decrease in Scottish corporate insolvencies is a positive sign for local businesses, the future may still be uncertain. The country is in a precarious position with ongoing calls for independence, Brexit and a rapidly-rising inflation rate.
Despite this, R3 found that Scotland had the lowest rate of companies at an elevated risk of insolvency in the whole of the UK.
Only 21.8% were at a greater than normal risk, that's 5.5% lower than the UK average. However, this rate is growing steadily, so Scottish businesses should be very aware of their financial status.
While the economic outlook is still uncertain, firms having difficulties must take action and take steps towards solvency. This is especially important as trading conditions become harder; rising inflation creates higher input costs for manufacturers, and dented consumer confidence means less overall profit.
- Scottish corporate insolvencies rise 30% year-on-year
- Scottish company insolvencies increase 21.1% year on year
Categories: Insolvency process