Insolvency statistics: Number of Scottish firms failing rises in second quarter
The number of Scottish firms failing in the second quarter of 2013 rose by 28.7% compared with the previous quarter and fell by 56.2% compared with the same quarter in 2012 (although it should be noted that Q2 2012 had the highest ever quarterly figure) according to analysis of the latest figures by leading accountants and business advisers BDO LLP. The latest Accountant in Bankruptcy (AiB) figures show that 184 Scottish companies went bust between April and June compared to 143 in the first quarter of the year.
Although these figures record an increase in corporate failures the total could have been considerably higher. Recently released figures show that HMRC has dramatically reduced its insolvency activity in Scotland. Given that HMRC is a major initiator of corporate insolvency proceedings this would tend to indicate that, despite this increase in failures, the numbers could have been much higher.
Bryan Jackson, Business Restructuring partner, BDO LLP, explained: “The rise in the number of corporate insolvencies in the second quarter is to be expected given many firms are simply ‘existing’ from month-to-month. For many firms, the long wait for the expected upturn in the economy has not arisen and they have exhausted cash reserves and found themselves falling into insolvency.
“While there are signs that some sectors such as manufacturing are improving, it is clear that retail, hospitality and construction are still being adversely affected by the recession. In particular, for businesses which rely on discretionary spending, there remains a real problem due to a lack of consumer confidence.”
Bryan concluded: “This increase in corporate failures should not surprise anyone as the economy remains subdued. There are definite signs of an improvement but, for many fragile businesses, these are coming too late.”