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Figures still lower than during recession

Sharp increase in Scottish company failures

Blair NimmoThere has been a marked increase in the number of businesses failing in Scotland during the first quarter of the year.

Insolvency appointments increased by 10% to 2016 from 188 in the same three months in 2015. This increase is mirrored in both liquidation appointments (up 9%), which tend to affect smaller businesses, and administrations (up 10%), which usually involve larger organisations.

However, a comparison with the previous three months (Oct – Dec) shows a 25% fall in the total number of insolvency appointments (down from 275 to 206).  Similarly, liquidations fell by 23% (from 239 to 184) and administrations decreased by 39% (down from 36 to 22).

Blair Nimmo, head of restructuring for KPMG in the UK, said: “The latest insolvency statistics are to some extent confusing – up on last year, down on the previous three months which largely reflects our own experience.

“We appear to have moved from cautiously optimistic to just cautious.  While much of our activity has been focused on oil and gas and related businesses suffering from the knock on impact, this has not yet and may well never manifest itself in a significant increase in insolvencies.

“We have to keep these figures in perspective, the number of failing businesses now, is still significantly lower than at the height of the recession, but we are beginning to see figures creep back up.

“The oil and gas downturn, coupled with an impending EU referendum and Scottish elections, have created a period of uncertainty, which inevitably results in unfavourable trading conditions. Changes to the minimum wage will also put additional pressure on businesses as they seek to implement the new National Living Wage rate.

“With those challenges in mind, companies need to continue to look at operational consolidation and efficiency improvements in order to avoid stress or distress.

“Cash management and cost reduction continue to be important whilst we are working with a cross section of businesses in terms of geography, size and sector developing contingency plans, assisting with refinancing and with their interaction with all stakeholders.  We are undoubtedly busier than we were at the tail end of last year.”

Quarter to 31 March

 

Liquidation
Appts

Admin & Rec
Appts

Total Corporate
Insolvency Appts

2009

175

54

229

2010

267

54

321

2011

230

52

282

2012

238

30

268

2013

132

37

169

2014

220

19

239

2015

168

20

188

2016

184

22

206

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

Q1 2016

184

22

206

Full calendar year

 

Liquidation
Appts

Admin & Rec
Appts

Total Corporate
Insolvency Appts

2001

582

60

642

2002

561

69

630

2003

635

64

699

2004

589

60

649

2005

590

54

644

2006

631

86

717

2007

617

75

692

2008

662

141

803

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

 

 

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