Why did all types of insolvency fall in December?
The final month of a challenging year for many Scottish firms hopefully brought a late upturn in business for them before Hogmanay and allowed them to start 2025 on a more positive (first) foot.
Continuing in this vein, the latest corporate insolvency figures released by the Accountant in Bankruptcy (AiB) for last month has shown a slight reduction in the headline rate but again has some interesting undercurrents and differences when it comes to the nations and the different procedures available.
In Scotland last month there were 82 company insolvencies – a reduction of 32 from last month and a total decrease of 24% from the same period 12 months ago.
The total number was made up of 27 compulsory liquidations (down from 54); 52 CVLs (down from 55) and three administrations (down from five). There were no CVAs or receivership appointments recorded.
Between 26 June 2020 and 31 December 2024 there were three restructuring plans recorded in Scotland and no insolvency moratoriums.
Traditionally Scotland has seen more compulsory liquidations than any other kind of insolvency process but CVLs overtook them in April 2020 and have remained higher ever since.
This shows that more Scottish directors and their accountants are taking the difficult decision early but retaining elements of control of the process rather than relying on creditors taking action and forcing the closure of their businesses.
The 12 month rolling insolvency rate for the effective register shows a rate of 51.9 companies per 10,000 entering insolvency in Scotland between 1 January and 30 December 2024. This was a decrease from the previous rolling 12 monthly total in November of 53.2.
The total number of company insolvencies for the whole of the UK in December was 1,943 – a monthly reduction of 153.
Chris Horner, Insolvency Director with BusinessRescueExpert, said: “Unlike the other areas of the UK, Scotland saw a fall across all insolvency categories in the previous month with compulsory liquidations falling the most.
“In England, Wales and Northern Ireland, compulsory liquidations increased while Scotland saw a 50% reduction.
“This shows that more Scottish directors were seizing the initiative and taking matters into their own hands regarding their agency when it comes to closing their business.
“Fewer were leaving the decision to HMRC and other creditors instead.
“For those that do, this removes the advantages they would have in a CVL in being able to choose an insolvency practitioner and also surrenders any influence over the timeline of the liquidation too.
“Next month’s figures will give us an interesting snapshot of how companies are starting the year and could set a narrative depending on what they show.”
You don’t have to wait until next month for January’s insolvency statistics to be released if your business is facing some familiar financial challenges.
You can get in touch with us right now to arrange a free initial consultation to discuss what options you have available depending on your unique circumstances.
No matter what your aims and objectives are for 2025, these will become clearer after talking with one of our advisors – or even give you new options you hadn’t thought or didn’t realise were available.