Accountant in Bankruptcy (AiB) has released official statistics reporting company insolvencies in Scotland for the fourth quarter (January to March 2018) of 2017-18. Corporate insolvencies increased from 846 in 2016-17 to 886 in 2017-18.
The number of corporate insolvencies in Scotland rose by 28% in Q4 2017-18 (January-March 2018) compared with Q3 2017-18 (October-December 2017), and rose by 67%compared with Q4 2016-17 (January-March 2017).
There were 1,038 bankruptcies awarded during this quarter, a 7.0% decrease on the same quarter in 2016-17. PTDs increased by 4.5% to 1,463 over the same period. There were 490 DPPs approved under DAS compared with 531 in the same quarter of 2016-17.
The number of Scottish registered companies becoming insolvent or entering receivership increased in the fourth quarter of 2017-18, with 259 companies becoming insolvent compared with 155 in 2016-17 Q4. There were 119 members’ voluntary liquidations (solvent liquidations), the same as in 2016-17 Q4.
The figures released today were produced in accordance with the professional standards set out in the Code of Practice for Official Statistics.
Commenting on the Accountant in Bankruptcy’s corporate statistics for the period January to March 2018 (Q4 201718), Tim Cooper, Chair of R3 in Scotland, the insolvency and restructuring trade body said “After a dip three months ago, the sharp rise in corporate insolvencies in the last quarter returns us to the trend of rising corporate insolvencies which began in early 2017. Corporate insolvency levels are back to where they were at the end of 2015, although it should be noted that insolvencies are still way below where they were in 2011-2012.”
“In many respects, this rise is not too surprising. Insolvencies of well-known companies have featured regularly on the newspaper front pages since the start of 2018, with further reports of firms scrambling to renegotiate rents and contracts with suppliers and landlords. It’s important to note that the AiB does not record administrations or Company Voluntary Arrangements, without which it’s hard to get an idea of the full picture in Scotland.”
“R3’s members reported that a number of companies sought urgent advice in the wake of the Carillion liquidation, but it’s difficult to assess the extent of any potential ‘domino effect’ from Carillion’s insolvency on other companies. Any large insolvency can lead to further troubles in the supply chain; support from the financial sector, as we have seen in the Carillion case, can, however, help to soften the blow for counterparties, with repayment dates pushed back and loan facilities extended.”
“Another key factor behind the rise in insolvencies could well have been the repeated bouts of severe weather which froze activity in our high streets, roads, and on construction sites. Festive trading was also not as strong as anticipated for many firms, and the prospect of the looming ‘quarter day’ rent payment due at the end of March may well have been the final straw for a number of firms.
“Many companies are facing a complex trading environment. Staff costs are rising; there are concerns about the availability of staff after the UK leaves the EU next year; new technologies promise a productivity boost, but investing in as-yet unproven assets and software can be risky. There is also the prospect of at least one interest rate rise later this year.”