Scottish insolvencies rise by more than 45 per cent

Blair Nimmo

There were a total of 698 corporate insolvency appointments between January and June – up from 479 in the previous six-months.

661 of the cases involved a company liquidation, while there were 37 administration and receivership appointments. 221 cases were HMRC-led.

It is however not all doom and gloom in that the number of insolvencies in the quarter ended 30 June was almost identical to that in the corresponding quarter last year. In addition whilst the number of administrations, which usually relate to the large businesses, is also up, it is still at a relatively low level when compared to historic data.

While ongoing Brexit and political uncertainty has created challenging conditions for the business community, wider economic volatility is being blamed for the rise, with a number of retailers among the most high-profile casualties in recent months.

Blair Nimmo, head of restructuring for KPMG, said: “While there is clearly a trend towards an increase in corporate insolvencies, there are some signs of resilience. The last quarter has remained far more static, and a number of industries are taking proactive measures to put themselves on a more stable financial footing, including retailers, hoping CVA proposals could head off the prospect of administration.

“The ongoing Brexit discussions and change of Prime Minister and Cabinet have undoubtedly create a climate of uncertainty, but there are wider challenges at play, creating a toxic mix of issues for businesses going through a period of distress. The best approach for any business in Scotland right now is to maintain a fiscally cautious approach, ensuring you maximise reserves, proactively and regularly review contingency plans and – ultimately – plan for any worst case scenarios. A number of challenges could be on the horizon, but with a resilient, focused approach, including taking appropriate advice at an early stage, Scotland’s business community can continue to grow sustainably in the long-term.”