The number of Scottish registered companies becoming insolvent or entering receivership increased in the third quarter of the 2022-23 financial year, with 272 companies becoming insolvent, 13.3% more than the figure (240) in the same quarter of 2021-22. This marks a return to pre-pandemic levels for corporate insolvencies.

Steven Jansch

Steven Jansch, head of insolvency at Gilson Gray, said: “The number of Scottish companies entering insolvency has increased again, according to the AiB’s latest figures, and that upward trend is set to continue.

“Overall insolvencies are up both when compared with year-on-year and pre-Covid levels. What is interesting to see, though, is that creditor pressure has yet to return to pre-pandemic levels – although year-on-year levels of compulsory liquidations have increased, this is still lower than what was typical during 2019-2020.

Mr Jansch continued: “The cost-of-living crisis is yet to take its full toll on Scottish businesses, and I expect increased numbers again next quarter. While it is good to see that overall numbers of insolvencies are returning to a ‘healthy’ pre-pandemic level – meaning that some directors are properly dealing with longer term business issues – the rise in compulsory liquidations is a sign that there is more to come.

“Good quality, regularly updated, and stress tested management information is crucial for the long-term survival of any business. Directors should proactively take advice from professional advisors to ensure that creditor pressure does not suddenly become an insurmountable burden.”

Other insolvency statistics show that there were 1,966 personal insolvencies (bankruptcies and protected trust deeds (PTDs)) in Scotland in 2022-23 Q3, 101 (4.9%) fewer than in the same quarter in the previous financial year (2021-22 Q3).

A total of 574 bankruptcies were awarded during this quarter – a decrease of 10.0% when compared to the same quarter in 2021-22. PTDs decreased by 2.6% to 1,392 over the same period.

In the third quarter of 2022-23, a total of 490 bankruptcy awards were made following applications submitted to AiB, all through the revised fee structure. Of this total, 352 (71.8%) applicants were not required to pay any fee at all.

There were 785 applications for moratoria granted in 2022-23 Q3. This is 46 (6.2%) more than the figure of 739 granted in the same quarter in 2021-22.

There were 1,309 debt payment programmes (DPPs) under the Debt Arrangement Scheme (DAS) approved in 2022-23 Q3, compared with 1,102 approved in the same quarter of 2021-22.

A total of 440 approved DPPs under the DAS were completed in 2022-23 Q3 – a 16.1% increase on the same quarter in 2021-22.

There were 283 DPPs revoked in 2022-23 Q3. This is 253 fewer than the figure of 536 revoked in the same quarter of 2021-22.