Number of Scottish corporate insolvencies falls

However, the total number of bankrupt Scottish businesses during the period was 21 per cent higher year-on-year.

The figures were released by Accountant in Bankruptcy (AIB), which noted that the quarterly total had been declining until the second quarter of 2015-16 at which point numbers began to rise again, to levels last seen in 2013/14.

The quarterly figure consists of 154 compulsory liquidations, 61 creditors’ voluntary liquidations and three receiverships. There were also 106 members’ voluntary liquidations, which is down by half from the 215 recorded in the previous quarter.

Eileen Blackburn, Chair of R3 in Scotland’s Technical Committee, the insolvency trade body said: “It’s too soon to tell if there will be a ‘Brexit’ effect, but it’s good to see that the initial turbulence hasn’t translated into businesses being pushed over the edge.

“However, the decision to leave the EU and a potential second Scottish independence referendum on the horizon means that businesses could face a period of prolonged uncertainty.

“Like their counterparts elsewhere in the UK, Scottish businesses now have to adapt a ‘wait-and-see’ approach when it comes to planning for the future which can make it difficult for decision-makers to plan ahead with confidence.

“Many of Scotland’s oil and gas businesses are undertaking periods of restructuring, saving them from having to enter formal insolvency procedures, which will be contributing to the low number of corporate insolvencies.

“Companies that are facing financial struggles should seek advice as early as possible. Ignoring the problem only prolongs the difficulties and jeopardises the best chance of recovery.”

Meanwhile, AIB said there was a total of 2,424 personal insolvencies in Scotland in the second quarter of 2016-17 which represents a 0.8 per cent increase on the previous quarter.

The current quarter’s figures are 8 per cent higher than the same quarter in the previous year.

Ms Blackburn added: “The numbers of personal insolvencies in Scotland are beginning to stabilise after a long-term decline.

“It’s probably too early for ‘Brexit’ to be having any effect on the figures but it’s possible that it could cause financial difficulties for people in the future if the cost of living rises.

“The falling pound has increased the cost of imports, and while businesses haven’t yet passed this on to consumers through price hikes, if the pound remains weak they may not be able to absorb higher costs in the long-term.

“A recovering oil price has already caused a rise in inflation and if that continues, and inflation overtakes wage growth, it will have a tangible impact on people’s ability to make end meets.

“According to R3’s latest research nearly half (46 per cent) of Scottish adults already struggle to make it to payday. This is concerning because if the cost of living increases, even marginally, it could have a significant impact on people’s finances.

“It’s important that people having financial difficulties don’t stick their head in the sand but seek qualified advice and take action.”