Corporate insolvencies, including liquidations and receiverships, totalled 285. This represents a 2.4% decrease compared to the same period in the previous year and an 8.9% drop from the preceding quarter. However, R3 in Scotland’s chair, Richard Bathgate, notes a significant shift within these figures.

Mr Bathgate, who is also restructuring rartner at Johnston Carmichael, said: “While corporate insolvency levels in Scotland have fallen compared to last quarter and last month, the make-up of the figures has changed significantly and suggests that the Scottish insolvency landscape is very different to how it was three and 12 months ago.

“This quarter’s figures have largely been driven by a sharp increase in the number of solvent firms being wound up and by a rise in creditors turning to winding up orders to chase the debts they are owed.”

MVLs reached their highest level since Q4 2020-2021, suggesting directors are opting to close solvent businesses, potentially in anticipation of April’s National Insurance and Minimum Wage increases. The rise in compulsory liquidations indicates creditors are becoming more proactive in chasing debts amidst widespread cost pressures.

Looking ahead, Mr Bathgate acknowledges a blend of challenges and opportunities for Scottish businesses in 2025. While the economy shows signs of recovery, rising costs persist. Retailers saw a modest festive boost, but the crucial “golden quarter” remained flat, reflecting continued consumer caution.

Business confidence is waning as firms brace for the Budget’s impact. The Minimum Wage increase poses a challenge, particularly for hospitality and retail, while the rise in employer National Insurance contributions adds further pressure. Businesses may struggle to pass these costs onto customers, potentially leading to cutbacks or job losses.

Personal insolvencies, including bankruptcies and protected trust deeds, also decreased, totalling 1,784. This is an 11.4% drop year-on-year and a 6% decrease from the previous quarter, primarily driven by a reduction in Protected Trust Deeds. However, bankruptcies rose slightly quarter-on-quarter, suggesting more individuals with high debt levels are seeking formal insolvency solutions.

Mr Bathgate highlights the ongoing financial strain faced by many in Scotland, with families making difficult choices between essential expenses. While the Scottish Budget offers some hope with measures like the planned removal of the two-child benefit limit and expanded childcare, immediate relief for struggling families is limited. The new Pension Age Winter Heating Payment provides some comfort to pensioners facing rising energy costs.

Mr Bathgate urges both businesses and individuals facing financial difficulties to seek professional advice promptly. “The sooner you speak to a qualified professional who can help you understand your options, the more time you’ll have to plan your next steps,” he concluded.