With the clocks going back this coming weekend, it’s the right time to have a look back at the latest corporate insolvency figures from the Accountant in Bankruptcy – Scotland’s insolvency service – that cover last month’s insolvency activity in Scotland – while it’s still light enough to do so!
Analysis
In Scotland last month there were 73 company insolvencies which was a decrease of 16% from August.
This total consisted of 48 company voluntary liquidations (CVLs) (down from 56 in August); 18 compulsory liquidations (down from 42) and seven administrations (up from two). There were no Company Voluntary Arrangements or receivership appointments.
Between 26 June 2020 and 30 September 2024, there were two restructuring plans in Scotland and no moratoriums.
Scotland has historically seen more compulsory liquidations than any other kind of insolvency process but since April 2020, CVLs overtook them and have remained higher ever since.
This shows that more Scottish directors and their accountants are being proactive and taking difficult but practical decisions earlier rather than relying on their creditors to take action themselves and force the closure of their companies.
The total insolvency rate in Scotland in the 12 months up to and including September 2024 was 52.5 per 10,000 companies on the effective register.
This was down by 1.6 from the preceding 12 months ending September 2023.
“The business climate remains difficult”
Tim Cooper, President of R3, the insolvency and restructuring trade body said: “The business climate remains difficult as firms face a multitude of issues including ongoing cost challenges, uncertainty around announcements in the Budget and the potential knock-on effects of the conflict in the Middle East.
“Firms are worried about the impact future tax rises could have on their bottom lines, and members are telling us that there’s an increased demand for advice and support around Member Voluntary Liquidations as directors look to take steps to reorganise their business and its finances ahead of any potential tax changes in the Budget.
“The conflict in the Middle East will likely affect UK businesses. Increased instability in the region could disrupt trade routes and supply chains, affecting businesses that rely on imports and exports from the Middle East.
“Businesses will have to weigh up whether they pass any cost increase onto customers or absorb it themselves. This is particularly relevant for sectors like energy, manufacturing and retail.
“Despite these issues there has been some positive news for certain key sectors of the economy with news of construction output increasing, retail sales volumes continuing to rise in August and consumers spending more in the hospitality sector last month. Firms in these sectors have had a challenging year and they will be hoping this is the prelude to a strong finish to 2024.”
And so say all of us.
Many Scottish businesses might be considering battening down the hatches ahead of an uncertain Budget and festive period to follow but no matter what challenges are facing your business, there are positive changes you can make that can provide results you could see before the Christmas lights go up.
Get in touch with us today to arrange a free initial consultation with one of our expert advisors.
Once they get a clear picture of your business and circumstances, they’ll be able to give you a tailored series of options that are applicable and appropriate for you and your business goals.
The sooner you arrange a convenient chat, the sooner you can implement changes that will benefit you not just now but beyond Hogmanay into 2025 too.