Scottish business insolvencies increase by 49.1%

Latest figures from Accountant in Bankruptcy (AiB) have indicated that business insolvency numbers (liquidations and receiverships) in Scotland increased by 49.1% in Quarter 1 (Q1) compared with Q1 2021-2022.

The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q1 2022 rose by 1.3% compared with the previous quarter (January-March 2022).

Richard Bathgate, Chair of insolvency and restructuring trade body R3 in Scotland and Restructuring Partner at Johnston Carmichael, said “The increase in corporate insolvencies in Q1 2022-23 compared to the same time last year has largely been driven by a 52% increase in the number of Creditors’ Voluntary Liquidations (CVLs) (131 in Q1 2021-22 compared to 199 in Q1 2022-23).”

“This suggests that many company directors are making the decision to close their businesses rather than attempting to carry on trading in the current climate.”

“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.”

“Businesses in Scotland have been hit hard by soaring prices of raw materials and fuel, which in turn has had a knock-on effect on consumer confidence. With footfall low and costs rising, for those businesses already operating in survival mode following the pandemic, particularly in sectors like retail and hospitality, these are troubling times.”

“The government’s Recovery Loan Scheme, which offered a lifeline to many small businesses in Scotland, finally came to an end in June, so it’s too early to tell what impact this will have on insolvencies. But last week it was announced that a successor scheme will be open for applications in August – which will hopefully help mitigate any rise in business insolvencies in the autumn.”