ANY rise in corporate insolvencies is unwelcome.
And news yesterday of a 70.6% year-on-year leap in the number of corporate insolvencies in the opening quarter of 2014 was a big as well as an unpleasant surprise, even taking into account the historical pattern of company failures rising as the economy recovers from recession.
Experts attributed the leap in the number of insolvencies, to 244 in the January to March quarter, partly to the emergence of more potential buyers of assets of distressed companies, as businesses with access to funds start investing again amid better economic conditions.
This improvement in the market for distressed assets can provide a more lucrative exit for banks and other creditors than would have been the case in the depths of recession.
And the insolvency numbers could climb higher from here.
There is a view that banks may be holding off from taking action against companies which have alleged they were mis-sold complex interest-rate-hedging products. And there is a belief that taxpayer-backed banks might act more on purely commercial and less on public interest grounds when returned fully to the private sector. It remains to be seen whether or not this transpires.
The view that higher corporate insolvency numbers might be a sign things are getting better may come as something of a relief in the context of yesterday's grim figures from the Accountant in Bankruptcy.
But it will be of little or no comfort to those businesses which are now having the plug pulled by banks or other creditors, often after a long struggle.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article