Main Menu

Claims and insolvencies rise

Company failures soar as Carillion collapse takes toll

Carillion sign

Carillion: collapse has caused a devastating ripple effect (pic: Terry Murden)


 

Companies are falling victim to non-payment of debt at the highest rate for almost a decade, according to new figures.

It is resulting in a sharp rise in the number of firms going bust or making insurance claims to recover money owed.

Corporate insolvencies in Scotland in the first three months of this year rose by more than a third on the previous quarter. 

The number of firms making trade credit insurance claims was up 50% to 3,966. That equates to 44 per day, the highest quarterly figure since the autumn of 2009.

The figures from the Association of British Insurers partly reflect the collapse of construction giant Carillion which impacted among the wider supply chain and left many firms out of pocket.

ABI’s figures show that in the first quarter of 2018 in Scotland:

  • There were 237 total company insolvencies, an increase of 34.7% compared to Q1 2017. Of these, 224 were company liquidations, a 46.4% decrease on the same quarter of 2017.
  • There were 132 compulsory liquidations, a 43.5% increase since Q1 2017.
  • There were 11 administrations, one company voluntary arrangement and one receivership appointment during this period.
  • The value of UK domestic claims paid – £54 million – was a record amount for the first quarter of a year.

Mark Shepherd, Assistant Director, Head of Property, Commercial and Specialist Lines, ABI, said: “This is a tough time to be in business and it is not getting any easier.

“The collapse of Carillion was one of a number of high-profile major insolvencies, which dramatically highlighted how the ripple effect of a company failure can have a devastating impact throughout the supply chain. The commercial environment remains a challenging one for customers, suppliers and insurers.

Never has the importance of trade credit insurance been greater – the survival of any business could be at risk without it.

“With too many firms at the mercy of non-payment of debts, the time has come for trade credit insurance to become an essential part of every businesses’ contingency planning.”

 



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Your email address will not be published.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.