Scottish corporate insolvencies hit all-time high

Insolvency Statistics for the 4th Quarter of 2011 (Quarter ended 31 December 2011) *

A total of 1,526 Scottish companies entered an insolvency process during the calendar year of 2011 – the highest annual number of Scottish corporate insolvencies ever recorded.

The figure is also a 14.1% increase on the number recorded during the year ended 31 December 2010. 

The statistics reveal that in the final three months of 2011 there were 385 corporate failures in Scotland.  This represents more than four companies per day entering in to an insolvency process in Scotland. 

Of these, 290 were liquidations, which tend to arise from Court action for the recovery of debt, and more often affects smaller companies. 

Last year, 1,237 Scottish companies went into insolvent liquidation.  The prevalence of liquidations is a concern because unlike other types of insolvency (such as administration), liquidation is not designed to save businesses.

Matt Henderson, Business Recovery and Insolvency Partner commented, “To put the latest statistics in to some context, 657 Scottish companies entered an insolvency process in the year ended 31 December 2007.   The annual total for the year ended 31 December 2011 is 1,526, which is 232% of the 2007 figure.”

“It is hoped that an increased availability of credit will help some smaller businesses survive, but it is clear that many are still struggling with current market conditions.  In previous recession’s insolvency statistics tended to increase as the economy recovers, so these statistics could actually increase yet further as the Scottish economy improves.”

As confidence increases and the availability of credit improves the market for distressed assets should strengthen which might mean that more companies will enter the insolvency process as new owners take up the opportunity to acquire distressed assets.

* Scottish Figures extracted from the UK Government’s Insolvency Statistics as released by the Insolvency Service at 9.30 am on Friday 3 February 2012.