By Ian McConnell

Scottish corporate insolvencies in the opening three months of 2022 totalled 240 – up 164 per cent from 91 in the same period of last year – official figures reveal.

The figures, published yesterday by the Accountant in Bankruptcy, show there were 854 corporate insolvencies in the year to March. This is up from 442 in the previous 12 months, insolvency trade body R3 noted.

Richard Bathgate, chairman of R3 in Scotland and restructuring partner at accountant Johnston Carmichael, said this rise had been “particularly driven by directors placing companies into insolvency using the CVL (creditors’ voluntary liquidation) procedure”.

READ MORE: Ian McConnell: Futile hankering after long-lost Empire by Brexiters but numbers tell real story

He added: “The timing of this increase in corporate insolvencies coincides with many businesses needing to commence repayments on bounce back loans from May 2021, notwithstanding that there are options available for companies struggling to make bounce back loan repayments, including the pay as you grow scheme.”

There were 200 CVLs in the January to March quarter, up from 56 in the same period of last year. Compulsory liquidations in the opening three months of 2022 totalled 40, up from 35 in the January to March 2021 quarter.

Mr Bathgate flagged the impact on businesses of restrictions put in place late last year to combat the spread of the Omicron variant of Covid-19, noting these had continued into the opening months of 2022. He highlighted the effect of these restrictions on the hospitality sector. Mr Bathgate said: “As a result, many businesses missed out on a vital cash injection from trading at their busiest time of year during the festive period.”

READ MORE: Immigration: Ian McConnell: Why did Tory Brexiters think this was a good idea?

He added: “Businesses are being hit from every angle with creditor pressure increasing, inflation causing a rise in costs of raw materials, fuel and wages, whilst at the same time consumer demand is down because of the increased cost of living.”

Noting the January to March quarter “spanned the most recent period of restrictions” arising from the Omicron variant, Mr Bathgate said: “These restrictions included physical distancing and table service in hospitality settings, as well as impacting nightclubs and placing capacity limitations on indoor events.

“As we head into spring, this has meant some directors may be considering the debt in their business unsustainable and are using corporate insolvency and specifically CVLs to restructure their business and alleviate financial distress.”