Insolvency rate steady despite September surge – Daily Business

Company insolvencies in Scotland over the last 12 months are slightly lower than last year despite a sharp increase in September.

Last month saw a 41% rise to 103 insolvencies compared with the same month last year, significantly higher than the 2% rise across England and Wales.

Of the Scottish total, 50 were creditors’ voluntary liquidations (CVLs), 48 compulsory liquidations, and five administrations. There were no CVAs or receivership appointments.

Despite the surge north of the border, the overall insolvency rate for the year to September showed a slight improvement. The rate of 52.2 per 10,000 active companies was down by 0.3 from the preceding 12 months ending September 2024. This was similar to the 52.9 per 10,000 companies in England and Wales.

Historically, compulsory liquidations were the most common type of company insolvency in Scotland. However, since April 2020, numbers of CVLs have typically remained higher than numbers of compulsory liquidations.

Michelle Elliot, restructuring advisory partner at FRP in Glasgow, said: “Pressure on business will only intensify further if the IMF’s warnings of entrenched high inflation come true next year.

“This would keep consumer demand low and borrowing costs high – maintaining the acute squeeze on margins and revenue currently challenging firms in Scotland and across the UK.

“Next month’s Budget will also be decisive in shaping the near-term operating landscape.

“Anything that further dampens consumer confidence or raises business costs would be the final straw for companies currently on the edge, particularly hospitality firms that have been particularly hard hit after last year’s employer tax rises.”

Giuseppe Parla, Restructuring & Insolvency director at Menzies, warned that businesses are holding their breath until the Budget.

“Budget uncertainties, rumours of tax and price hikes, and inflation set to be the highest among the G7 club, all point towards a landslide of slow to no growth,” he said.

Commenting on the figures for England and Wales, he said “businesses are running out of options to protect margins and plan ahead.”