Credit, Collections & Insolvency News
The number of corporate business insolvencies in Scotland fell by 15% in April-June 2019 compared with the previous quarter (January-March 2019), and fell by 2% compared with the same quarter the previous year (April-June 2018) according to latest Accountant in Bankruptcy (AiB) statistics.
The number of Scottish registered companies becoming insolvent or entering receivership decreased in the first quarter of 2019-20, with 239 companies becoming insolvent compared with 245 in 2018-19 Q1. There were 137 members’ voluntary liquidations (solvent liquidations) in 2019-20 Q1 compared with 141 in 2018-19 Q1. Corporate insolvencies increased from 884 in 2017-18 to 967 in 2018-19.
Commenting on the figures Eileen Blackburn, of R3 insolvency and restructuring trade body in Scotland, said “The fall in corporate insolvency numbers compared with the previous quarter is out of line with the general upward trend since the beginning of 2017, but a quarterly fall is not enough by itself to reverse the longer-term pattern.”
“In general, it’s fair to say that economic sentiment in Scotland is mixed. Businesses which were bracing themselves for Brexit at the end of March may have been caught out by the decision to postpone the UK’s exit from the EU until the end of October. Many companies stocked up in the first quarter of 2019 on raw materials and components, in preparation for potential disruption to normal delivery flows via EU countries in the case of a no-deal Brexit, and may have found after the 29th of March that they were left with a pile of stock in warehouses, with no immediate buyers. The prospect of doing it all over again later this year, putting added pressure on cash flow, is not something that will appeal to many businesses, which – understandably – would prefer some predictability and stability as they plan for the rest of the year and beyond.”
“While recent GDP forecasts for Scotland have been slightly better than earlier predictions, this may have been partly as a result of stockpiling, and may be at the expense of later economic activity, as companies decide that caution is the wiser policy in unsettled times.”
“The recent increase in ‘real wages’ – wage increases above the level of inflation – will have given Scottish consumers’ personal finances a boost, although this has not necessarily fed through to increased spending in shops, especially for consumer goods. On the plus side, the price of oil recovered somewhat over the second quarter, which will have been helpful to the beleaguered Scottish extraction industry.”
“R3’s monthly research into the levels of Scottish companies at higher than usual risk of insolvency in the next 12 months show that the proportion of Scotland’s businesses at elevated risk has been remarkably static for nearly a year, albeit at a higher level than between two and three years ago.”
“It seems that a raised risk level may be the ‘new normal’ for Scottish businesspeople. Adapting to new market realities is key to any business’s survival – and the sooner action is taken to make necessary changes, the better for any company. Speaking to a professional and qualified advisor can be a sensible move, to get an unbiased third party perspective on next steps.”
