SCOTTISH corporate insolvencies in the first quarter were up by 67 per cent on the same period of last year, official figures have revealed.
Tim Cooper, who chairs insolvency trade body R3 in Scotland, highlighted his view that the latest figures signalled a return to a trend of rising corporate insolvencies which began in early 2017, following a year-on-year dip in company failures in the fourth quarter of last year.
The figures, from the Accountant in Bankruptcy (AiB), show there were 259 corporate insolvencies in the opening three months of 2018, up from 155 in the first quarter of last year.
In the fourth quarter of last year, corporate insolvencies totalled 202, which was down from 210 in the final three months of 2016.
Mr Cooper said: “After a dip three months ago, the sharp rise in corporate insolvencies in the last quarter returns us to the trend of rising corporate insolvencies which began in early 2017. Corporate insolvency levels are back to where they were at the end of 2015, although it should be noted that insolvencies are still way below where they were in 2011/12.
“In many respects, this rise is not too surprising. Insolvencies of well-known companies have featured regularly on the newspaper front pages since the start of 2018, with further reports of firms scrambling to renegotiate rents and contracts with suppliers and landlords.”
He added: “It’s important to note that the AiB does not record administrations or company voluntary arrangements, without which it’s hard to get an idea of the full picture in Scotland.”
The AiB observed that corporate insolvencies in Scotland in the first quarter of 2017 had been “particularly low”.
However, it also noted that, comparing the year to March with the preceding 12 months, the number of corporate insolvencies in Scotland was up by 4.7% at 886.
Mr Cooper noted that R3’s members had reported that a number of companies “sought urgent advice” in the wake of the liquidation of construction and services company Carillion.
He said: “It’s difficult to assess the extent of any potential ‘domino effect’ from Carillion’s insolvency on other companies.”
Mr Cooper also cited the potential impact of severe weather and retail sector weakness.
He said: “Another key factor behind the rise in insolvencies could well have been the repeated bouts of severe weather which froze activity in our high streets, roads, and on construction sites. Festive trading was also not as strong as anticipated for many firms, and the prospect of the looming ‘quarter day’ rent payment due at the end of March may well have been the final straw for a number of firms.”
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 here