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Improving outlook on insolvencies

Fewer failures as firms adjust to new climate

Blair NimmoThe number of businesses failing in Scotland fell significantly in the second quarter of 2017, compared to the same three months in 2016. 

Figures for the three months to 30 June reveal the total number of insolvency appointments decreased by 27% (196 against 270) compared to the same period in 2016.

There was a 31% decrease in liquidation appointments (170 against 246), which tend to affect smaller businesses, but an 8% increase in administration appointments (26 against 24), which usually involve larger businesses.

A comparison between the 12 months to June and the same period to June 2016 shows a 7% fall in the number of insolvency appointments (867 against 935). There was also a 7% decrease in liquidation appointments (772 against 834), which tend to affect smaller businesses, and a 6% fall in administration appointments (95 against 101), which usually involve larger businesses. 

Blair Nimmo (pictured), KPMG’s UK head of restructuring, said the figures marked an “encouraging sign” for business in Scotland.

“The statistics reflect our experience on the ground. Oil and gas has come through a very difficult period and in order to survive many businesses in the sector have drastically changed their operating models and cut costs significantly.

“This has put them in a stronger position and, along with the support of their stakeholders, they continue to navigate through what is still a challenging period.

“As a result, we are seeing few insolvencies in this sector, with most of our work revolving around improving approaches to working capital management. Otherwise, it is difficult to detect any sectoral pattern in Scotland and, overall, we sense a very cautious approach from most corporates, given the current political and economic climate.”

The Holiday Inn Aberdeen Westhill The Holiday Inn Express Aberdeen City Centre have been bought out of administration by the Cairn Group, securing 125 jobs.

Iain Fraser and Tom MacLennan, partners at FRP Advisory, the business advisory firm, acted as joint administrators of vendor European Development Company.

EDC, which was founded in 2007, entered administration in November 2016. EDC also owned and operated a Holiday Inn Express on Picardy Place in Edinburgh City Centre which was sold out of administration by FRP Advisory on 14 January 2017.

Mr Fraser said: “The administration period provided a vital cushion to allow for a thorough marketing process while the hotels continued to trade as normal.”

 

 

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