Monday, 7 January 2013

Insolvency Rate in Scotland Falls 6%

According to KPMG the insolvency rate in Scotland has fallen by 6% in 2012.  There were 1277 appointments in 2011 and 1200 in 2012.  The majority of the fall occurred in the last 3 months of the year.  Blair Nimmo from KPMG said that it may be that companies have become better adapted to trading in difficult conditions.  The fall is the first fall since 2008.

However, Blair Nimmo, head of restructuring at the big four accountant in Scotland, said firms will need to stay in defensive mode as the economic climate is likely to remain challenging.

Noting a slowdown in the rate of failures in the second half of 2012, Mr Nimmo said reports of high-profile retail failures (such as Comet) may have created the impression things are worse than they are.

However, he added: "The reduction is not significant enough to indicate the many challenges posed by the current global economic climate have been completely overcome."

KPMG recorded 1059 liquidation appointments in 2012, compared with 1102 in 2011 and 662 in 2008.

The firm said there were 141 administration and receivership appointments in 2012 and 2008, compared with 188 in 2011.

However,  It is not just all about administrations and liquidations.  What about company voluntary arrangements?

Scotland businesses are more likely to fail than English ones for the simple reason that there is no rescue culture in Scotland.  Read our pages on company rescue in Scotland.  The CVA is underused as there is a perception amongst Scottish insolvency professionals that it doesn't work.  Over 700 companies are saved south of the border by CVAs compared to about 5 a year in Scotland.  That does not sound right does it?

Want to know more.  Call me on 0771476 5578

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