Insolvencies fall

Covid support ‘distorts’ reality of failures

lock on gates at bar

Firms continue to accrue liabilities

Corporate insolvencies in Scotland fell below 2019 levels last year as COVID-19 support measures provided a lifeline for struggling businesses.

The 466 insolvencies in Scotland in 2020 was 25 fewer than in 2019, while the number of administrations rose by just five to 56.

Blair Nimmo, head of restructuring for KPMG in the UK, said: “While the breadth and depth of support measures available have provided a vital lifeline to Scotland’s business community, these figures provide a distorted view of reality. 

“Those businesses that remain in hibernation due to ongoing lockdown measures, such as those in the leisure and hospitality and travel and tourism sectors, continue to accrue liabilities while seeing precious little cash flow into the business.

“At some point, rent and tax deferrals and loans will need to be repaid. The Job Retention Scheme will unwind. Weaning off these support schemes is going to be a massive challenge for many.”

While the pandemic and resulting lockdown measures continue to have ramifications for many businesses, the impact of the UK’s new deal with the European Union has also come into focus. 

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