In the last month before the new financial year, it could be expected that Scottish directors would look to explore insolvency procedures to close their business or protect it during restructuring before new financial rules and expenses came into effect.
But the latest figures were higher than possibly anybody was expecting.
In Scotland last month there were 118 company insolvencies, a 3% increase on the total from a year ago and 15 more cases recorded than a month previously.
Since March 2020, there has been two other occasions when the monthly total equalled 118 – in November 2022 and again in May 2024.
March 2025’s total was made up of 57 compulsory liquidations (up from 38); 55 CVLs (down from 60) and six administrations (up from five). There were no CVAs or receivership appointments recorded.
Scotland’s insolvency regime is partly devolved.
The Accountant in Bankruptcy (AiB), Scotland’s insolvency service, administers the Register of Insolvencies which is a publicly accessible statutory register regarding the insolvency of individuals and businesses in Scotland including company liquidations and receiverships.
Between June 26th 2020 and March 31st 2025, there were three restructuring plans and one moratorium in Scotland. Both of these procedures were created by the Corporate Insolvency and Governance Act 2020.
Traditionally Scotland has seen more compulsory liquidations than any other kind of insolvency process but CVLs overtook them in April 2020 and had remained higher ever since until this month – the first month the positions had reverted.
Many Scottish directors and their accountants are continuing to take difficult decisions early enough to give them control of key elements of an insolvency process. Many creditors are beginning to take action and force the closure of their creditors to force sales of their assets to recoup arrears.
The 12 month rolling insolvency for the effective register in Scotland shows a rate of 51.7 companies per 10,000 on the effective register. This was up 0.1 on the preceding 12 months ending March 2024.
The total number of company insolvencies for the whole of the UK in March 2025 was 2,139 – a monthly decrease of 20.
Tom Russell, Vice President of R3, the UK’s insolvency and restructuring trade body said: “The slight month-on-month reduction in corporate insolvency numbers is due to a fall in Compulsory Liquidations compared to last month’s figures.
“However, the corporate insolvency statistics published today are higher than they were a year ago and show that demand for insolvency support and the number of firms entering insolvency processes are still high.
“CVLs, administration and CVA numbers are higher than they were last month and last March and reflect a business climate that is being shaped and buffeted by national and global political issues, which are adding further pressure on firms.
“Creditors also remain prepared to turn to winding-up orders to pursue monies owed, whether that is to recover money for the public purse in HMRC’s case, or to help address their own debts in the case of those creditors from the private sector.
“The announcement of the US tariffs and the rises in National Minimum Wage and Employers NI have caused directors most concern over the last few weeks. These have added further strain on businesses that have been dealing with increases in costs and contractions and caution around spending for more than 18 months, all of which have hit margins, confidence and in many cases, firms’ ability to stay solvent.
“For many small businesses particularly, an increase in late payments has a further knock on impact on liquidity and profitability, in already tight trading conditions for the small business community.
“While it’s too early to understand the extent of the impact the tariffs will have on businesses, we know they will affect purchase and sale prices, and will subsequently affect margins and profits, and potentially firms’ ability to service debt and source rescue funding.
“At the same time, March was the last month before the National Insurance and Minimum Wage increases came in and we know this has affected business confidence, recruitment and investment, as well as driving increases in enquiries for restructuring advice and support.
“We will see the impact of this policy on business from this month and from the next set of figures but if firms have not made the most of the time between its announcement and introduction, and from the next set of figures, but if firms have not made the most of the time between its announcement and introduction, we could see an increase in corporate insolvency numbers over the next quarter.
“From a sectoral perspective, construction output has been affected by mixed weather since the start of the year and ongoing issues with payment and costs, while retail has seen a slowdown in spending as a result of this year’s late Easter. Hospitality spending has increased in recent months in part due to the warmer weather and as consumers seem more willing to spend money on going out than they had been previously.”
While there was the slightest reduction in the overall number of corporate insolvencies last month, the trend is upwards and there have been more insolvencies recorded in the first quarter of this year than last.
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