Credit, Collections & Insolvency News
Business insolvency numbers (liquidations and receiverships) in Scotland for Q1 2024-2025 decreased by 3.1% compared with Quarter 1 (Q!) 2023-2024, to a total of 283 according to latest figures from Accountant in Bankruptcy (AiB).
The figures also decreased by 6% compared with the previous quarter’s total of 301 (January-March 2024).
Richard Bathgate, Scotland Chair of R3, the UK’s insolvency and restructuring trade body, said “The main driver of the quarterly fall in corporate insolvencies in Scotland is a drop in compulsory liquidations, while the annual fall in numbers is due to a slight drop in Creditors’ Voluntary Liquidations (CVLs), which offsets the very slight increase we’ve seen in compulsory liquidations since this time last year.
“However, when you look at the corporate insolvency numbers for this quarter compared to Q1 2019, the picture is very different: Creditors’ Voluntary Liquidation numbers have more than doubled, while compulsory liquidation numbers have fallen by nearly a third. This suggests that creditors have been less aggressive about taking action to recover their debts than they were in 2019, but also that more directors are closing the doors of their businesses than they were then, and this is a reflection of the turbulent business climate firms have experienced since the pandemic and the range of economic issues that occurred during and after it, all of which have had an effect on businesses.
“As CVL numbers have remained reasonably consistent over the last two quarters, it seems the economic growth we’ve seen since the start of this year has come too late for some Scottish businesses and hasn’t led to the upturn in revenue they needed to remain solvent.
“Despite the economic improvements and business confidence holding strong throughout the last quarter, the picture is still a challenging one for businesses in Scotland. The UK General Election introduced an element of uncertainty for businesses which has impacted the positive mood among businesses, and a further uptick in confidence will rely heavily on summer spending and activity, particularly during big events such as the Euros, the Edinburgh Fringe Festival, and the Highland Games, which are crucial for sectors like hospitality, retail and tourism.
“With the passing of the Circular Economy Bill, many directors will also be rethinking how their businesses operate this year. Food and hospitality services in particular will need to consider the impact of charges on single-use items like disposable cups and food containers, whether this will mean increasing prices or investing in reusable alternatives. These changes will need careful planning to manage costs effectively.
“Manufacturers and retailers will also need to adapt to new restrictions on unsold goods, potentially reducing their stock levels or exploring secondary markets. While these changes may present challenges, especially for businesses already facing financial difficulties, seeking professional advice early can help navigate the new regulations.”