The number of business insolvencies in Scotland in the last quarter of 2014 was down 38% on the previous year returning to pre-crash levels for the first time while the number of personal bankruptcies in Scotland is now at its lowest level in ten years
The number of corporate insolvencies in 2014 totalled 849, split into compulsory liquidations (71%), creditors’ voluntary liquidations (28%) and 1% of companies went into receivership, according to the latest figures from Accountant in Bankruptcy (AiB), the official statistics body in Scotland.
The figures show that corporate insolvencies were down 38.2% year on year in the last quarter of 2014 with 197 business failures reported.
Business minister Fergus Ewing said: ‘These are extremely encouraging numbers which illustrate that Scotland’s recovery continues to gather pace.
‘We are now looking at levels of sequestrations and companies going to the wall that haven’t been seen since before the global recession.’
The number of Scottish registered companies becoming insolvent or entering receivership decreased by 8.2 per cent in 2014-15 to the lowest annual total recorded in seven years.
This is also the third consecutive year of decline.This gives a total in 2014-15 of 849 company liquidations and receiverships, which is 8.2% lower than the total recorded in 2013-14 and the third consecutive year of decline, the lowest annual total since 2007-08.
However, there are warnings that the improved figures may not last due to complex bank loan agreements.
Paul Dounis, insolvency partner at Baker Tilly in Scotland said: ‘There has been a trend for the banks to sell off their non-core bad debt books to private equity groups. As these groups work through those loan books, they are prioritising those that they can realise assets from first.
‘However, as they start to focus on the more distressed companies in the portfolios, they may be left with little choice but to enter them into some kind of insolvency procedure.
‘We are also seeing a significant number of companies servicing their debts on an interest only basis. By doing this many of them are avoiding entering into insolvency procedures, but also not paying off any capital. This could leave many companies vulnerable as and when interest rates rise and inflationary pressures begin to emerge.’
Scottish business insolvency rates
| 2014-15 |
| Percentage change | Percentage change | ||||
| Q4 | Q1 | Q2 | Q3 | Q4 | 2014-15 Q3 | 2013-14 |
|
Receiverships | 1 | 0 | 1 | 3 | 2 | -33.3% | 100.0% | |
Compulsory liquidations | 181 | 188 | 152 | 135 | 139 | 3.0% | -23.2% | |
Creditors' voluntary liquidations | 62 | 62 | 56 | 55 | 56 | 1.8% | -9.7% | |
Total corporate insolvencies | 244 | 250 | 209 | 193 | 197 | 2.1% | -19.3% | |
Members' voluntary liquidations | 89 | 118 | 98 | 117 | 147 | 25.6% | 65.2% | |
Source: AIB
Personal insolvencies, which include bankruptcies and protected trust deeds (PTDs), also fell 15.2% from the same period year on year. A total of 2,569 were recorded during this period.
A full statement of Scottish insolvency statistics for the fourth quarter of 2014-15 is available here – http://www.aib.gov.uk/scottish-insolvency-statistics-2014-15-quarter-4-release