The level of corporate insolvency in Scotland has jumped by 70.6% year-on-year during the first quarter of 2014.
Figures from the latest Accountancy in Bankruptcy report show total corporate insolvencies rose from 184 in Q1 2013 to 244 in Q1 2014, as well as increasing 6.6% from Q4 2013.
The total figure consisted of 181 compulsory liquidations (an increase of 141.3% year-on-year), 62 Creditors Voluntary Liquidations (up 1.6% year-on-year), and one receivership (down 85.7% year-on-year).
Bryan Jackson, restructuring partner at accountancy and business advisory firm BDO, said the rising levels of corporate failure was “unwelcome, but predictable”.
Jackson said: “The rise in the number of corporate insolvencies in the first quarter is unwelcome, but predictable, news. Though the economy is in recovery, many Scottish businesses are still struggling to cope with the triple challenge of rising inflation, staff costs and slow spending.
“Unless troubled businesses see a perceptible upturn from the wider recovery, many will be left fighting to survive. Ironically, it isn’t surprising to see more corporate failures as the economy picks up.”
“Many of these businesses can seek help to extricate themselves from their financial plight before it gets to the insolvency stage but they must act and seek appropriate advice. I believe that we will still be seeing elevated levels of corporate failure as a result of the recession for the next four to five years when increased interest rates take their toll.”
Personal insolvencies in Scotland continued to decline, as there were 2,998 personal insolvencies in during Q4 2014, compared to 3,335 in the previous quarter – a reduction of 14% on the same period of the previous year.
Minister for Energy, Enterprise and Tourism, Fergus Ewing, commented: “Another drop in the number of personal insolvencies is welcome, especially with the figures showing a general decline since 2008-09.
“£8.1m has been repaid through the Scottish Government Debt Arrangement Scheme (DAS) this quarter, with a total of £30m repaid in 2013-14, helping to recycle funds into the economy.
“It is encouraging to see that ten times more people have chosen to repay their debts under this statutory scheme than the number seven years ago.”