Main Menu

'Not out of the woods yet'

Failures on rise after better year for insolvencies

Blair NimmoCorporate insolvencies fell last year, although they gathered pace in the final quarter as economic conditions worsened.

The number of businesses failing in Scotland fell by 4% from 943 in 2014  to 902 last year.

However, the final three months of 2015 saw a 30% increase in insolvency appointments from 210 in 2014 to 275.

Administrations, which typically affect larger organisations, increased by 52% (from 67 to 102) year-on-year.

From October to December, the number of administrations doubled from 18 in the previous year to 36.

12 months to 31st December 2015

 

Liquidation
Appts

Admin & Rec
Appts

Total Corporate
Insolvency Appts

2009

696

187

883

2010

935

174

1109

2011

1099

188

1287

2012

1028

139

1167

2013

747

125

872

2014

876

67

943

2015

800

102

902

Liquidations, which tend to affect smaller businesses, fell by 9% from 876 to 800. However, demonstrating a similar trend to administration appointments, a quarterly comparison of liquidations reveals an increase of 24% from 192 to 239.

Quarterly comparison

Quarter

 

Liquidation
Appts

Admin  & Rec Appts

Total Corporate
Insolvency Appts

Q1 2013

132

37

169

Q2 2013

172

28

200

Q3 2013

212

31

243

Q4 2013

231

29

260

Q1 2014

220

19

239

Q2 2014

225

15

240

Q3 2014

239

15

254

Q4 2014

192

18

210

Q1 2015

168

20

188

Q2 2015

194

20

214

Q3 2015

158

19

177

Q4 2015

239

36

275

Blair Nimmo, head of restructuring for KPMG in Scotland, said: “2015 saw a 4% decrease in the number of corporate insolvencies which, in general, is a positive sign for businesses and the Scottish economy.

“That being said, whilst there has been a continuing downward trend in corporate insolvencies since 2011, numbers have now levelled out, and at a higher point than pre-recession levels. Furthermore, an increase in administrations and liquidation appointments in the last quarter of 2015, suggests we are not quite out of the woods yet.  This correlates with other, recently announced, economic indicators often showing a more negative sentiment in Scotland than other parts of the UK.

 “It is difficult to see any sectoral pattern other than oil and gas which is no surprise.  Even then, the work we’re doing in the industry is not in the context of actual or prospective insolvencies, but rather assisting them in areas such as raising new finance, establishing a professional and disciplined approach to cash management and cost reduction, stakeholder management and contingency planning or disposal of peripheral assets or businesses.

“As in the past, we do not see the current oil price manifesting itself in significant insolvencies, but rather there will be opportunities for businesses to improve efficiency and consolidate.  Only those who don’t thoroughly revisit and challenge their operational and strategic business plans and take early corrective action will find themselves in difficulty.”



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.