Insolvencies rise as directors call it a day
Corporate insolvencies increased by half in the first three months of the year as many company directors decided to close their businesses rather than attempt to carry on trading in the current climate.
Figures from the Accountant in Bankruptcy show a 49.1%, increase to 243 from 163 for the same period last year.
The increase in corporate insolvencies has largely been driven by a 52% increase in the number of creditors’ voluntary liquidations – rising from 131 to 199 from 2021 to 2022.
The data from the AiB, an executive agency of the Scottish Government, also showed that from April to June this year there were 2,037 personal insolvencies; an increase of 8.1% when compared with the pervious year.
The number of liquidations and receiverships in Scotland rose by 1.3% compared with the previous quarter.
Bankruptcies during the first quarter this year remained the same – at 586 – when compared with the same quarter in the previous year.
While levels of bankruptcy remained the same when compared to last year, the overall rise in personal insolvency numbers over the last quarter was driven by an 11.8% increase in the number of people entering a Protected Trust Deed.
Of these, 91.8% came from debtor applications, with the remaining bankruptcies coming from creditor petitions.
Debtor applications for bankruptcy decreased by 5.4% from 569 to 538 year-on-year.
Administration bankruptcies decreased by 2.3% from 171 to 167, while minimal asset bankruptcies decreased by 6.8% from 398 to 371.
In Scotland, a trustee is appointed to administer each bankruptcy, with AiB appointed unless an insolvency practitioner is nominated to act.
In the first quarter, the AiB was appointed trustee in 546 cases awarded, or 93.2% of bankruptcies for the quarter.
Richard Bathgate, chair of insolvency and restructuring trade body R3 in Scotland, said: “Today’s figures highlight the economic pressures Scotland continues to face, with ongoing residual impacts of the pandemic, the rising cost of living and economic consequences of the war in Ukraine all affecting business performance.”