DISTRESSED businesses face a “toxic mix” of issues, including uncertainty relating to Brexit and the recent change of Prime Minister and Cabinet, an insolvency practitioner has warned.

Blair Nimmo, head of restructuring at KPMG, sounded the warning as the accountancy firm published analysis showing the number of Scottish companies entering administration, receivership or liquidation in the first half was, at 698, up by 45 per cent on the same period of 2018.

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It calculated that 661 of the cases involved a company liquidation, while there were 37 administration and receivership appointments. It noted that 221 cases were led by HM Revenue & Customs. KPMG flagged a rise in administrations, which usually relate to larger businesses, but said such insolvencies were “still at a relatively low level when compared to historic data”.

The accountancy firm said ongoing Brexit and political uncertainty had created challenging conditions, but also flagged wider economic volatility, observing that some retailers had been among the highest-profile casualties recently.

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Figures published last month by the Accountant in Bankruptcy show there were 239 corporate insolvencies in Scotland in the April to June quarter, down from 245 in the same period of last year.

Blair Nimmo, head of restructuring at KPMG, said: “While there is clearly a trend towards an increase in corporate insolvencies, there are some signs of resilience. The last quarter has remained far more static, and a number of industries are taking pro-active measures to put themselves on a more stable financial footing, including retailers, hoping CVA (company voluntary arrangement) proposals could head off the prospect of administration.”

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Touching on new Prime Minister Boris Johnson’s ministerial shake-up, he added: “The ongoing Brexit discussions and change of Prime Minister and Cabinet have undoubtedly created a climate of uncertainty, but there are wider challenges at play, creating a toxic mix of issues for businesses going through a period of distress.

"The best approach for any business in Scotland right now is to maintain a fiscally cautious approach, ensuring you maximise reserves, pro-actively and regularly review contingency plans and, ultimately, plan for any worst-case scenarios.”